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 March 31, 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 May 6, 1998, there were 9,011,605 shares of common stock
outstanding, par value $.01, of the registrant.
<PAGE>
SPSS Inc.
Form 10-Q
QUARTER ENDED MARCH 31, 1998
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Independent Auditors' Review Report 3
Consolidated Balance Sheets
as of December 31, 1997 and
March 31, 1998 (unaudited) 4
Consolidated Statements of Income
for the three months ended March 31, 1997
(unaudited) and 1998 (unaudited) 5
Consolidated Statements of Comprehensive
Income for the three months ended March 31, 1997
(unaudited) and 1998 (unaudited) 6
Consolidated Statements of Cash Flows
for the three months ended March 31, 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 Operations 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 5. Recent Developments 12
Item 6. Exhibits and Reports on Form 8-K 13
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<PAGE>
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 March 31, 1998, and the related consolidated statements of income,
comprehensive income, and cash flows for the three-month periods ended March 31,
1997 and 1998. These consolidated financial statements are the responsibility of
SPSS Inc.'s management.
We conducted our review 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 review, 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
April 28, 1998
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<PAGE>
SPSS Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)
<TABLE>
<CAPTION>
December 31, March 31,
1997 1998
-------------------- -------------------
(unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 8,079 $ 8,735
Accounts receivable, net of allowances 27,872 26,889
Inventories 2,520 3,006
Prepaid expenses and other current assets 2,811 2,457
-------------------- -------------------
Total current assets 41,282 41,087
-------------------- -------------------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, at cost:
Land and building 1,700 1,735
Furniture, fixtures and office equipment 6,044 6,126
Computer equipment and software 18,032 19,007
Leasehold improvements 2,627 3,449
-------------------- -------------------
28,403 30,317
Less accumulated depreciation and amortization 18,974 19,852
-------------------- -------------------
Net equipment and leasehold improvements 9,429 10,465
-------------------- -------------------
Capitalized software development costs,
net of accumulated amortization 6,703 7,277
Goodwill, net of accumulated amortization 1,062 1,020
Deferred income tax assets 2,588 2,588
Other assets 1,681 1,672
-------------------- -------------------
$ 62,745 $ 64,109
==================== ===================
CURRENT LIABILITIES:
Notes payable $ 71 $ --
Accounts payable 5,013 4,790
Accrued royalties 482 392
Accrued rent 428 469
Other accrued liabilities 9,912 7,984
Income taxes and value added taxes payable 1,299 2,477
Customer advances 208 238
Deferred revenues 9,715 8,364
-------------------- -------------------
Total current liabilities 27,128 24,714
-------------------- -------------------
Deferred income taxes 1,936 1,936
Other noncurrent liabilities 1,219 1,188
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 50,000,000 shares
authorized; 8,811,644 and 8,902,513 shares issued and
outstanding in 1997 and 1998, respectively 88 89
Additional paid-in capital 44,313 44,679
Accumulated other comprehensive income -
cumulative foreign currency translation adjustment (1,065) (849)
Accumulated deficit (10,874) (7,648)
-------------------- -------------------
Total stockholders' equity 32,462 36,271
-------------------- -------------------
$ 62,745 $ 64,109
==================== ===================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
SPSS Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------------
1997 1998
---------------- -----------------
Net revenues:
<S> <C> <C>
Desktop products $ 19,851 $ 20,615
Large System products 4,327 4,300
Other products and services 3,134 3,585
---------------- -----------------
Net revenues 27,312 28,500
Cost of revenues 2,589 2,435
---------------- -----------------
Gross profit 24,723 26,065
---------------- -----------------
Operating expenses:
Sales and marketing 12,682 14,281
Product development 4,345 4,954
General and administrative 3,266 1,785
---------------- -----------------
Operating expenses 20,293 21,020
Operating income 4,430 5,045
---------------- -----------------
Other income (expense):
Net interest income 109 28
Other expense (22) (162)
---------------- -----------------
Other income (expense) 87 (134)
---------------- -----------------
Income before income taxes 4,517 4,911
Income tax expense 1,603 1,685
---------------- -----------------
Net income $ 2,914 $ 3,226
================ =================
Basic earnings per share $ 0.33 $ 0.36
================ =================
Shares used in computing basic
earnings per share 8,735,973 8,843,934
================ =================
Diluted earnings per share $ 0.30 $ 0.34
================ =================
Shares used in computing diluted
earnings per share 9,611,152 9,517,007
================ =================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
SPSS INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1998
---------- ------
<S> <C> <C>
Net income $2,914 $3,226
Other comprehensive income (loss):
Foreign currency translation adjustment (58) 216
---------- ------
Comprehensive income $2,856 $3,442
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
SPSS Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
1997 1998
----------------- -----------------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,914 $ 3,226
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 1,565 1,454
Changes in assets and liabilities, net of effects of
acquisitions:
Deferred income taxes (108) -
Accounts receivable (1,675) 983
Inventories 302 (486)
Accounts payable 1,162 (223)
Accrued royalties (120) (90)
Accrued expenses (2,412) (1,863)
Accrued income taxes (995) 1,178
Other (2,657) (918)
----------------- -----------------
Net cash (used in) provided by operating activities (2,024) 3,261
----------------- -----------------
Cash flows from investing activities:
Capital expenditures, net (505) (1,861)
Capitalized software development costs (775) (1,016)
Net payments for acquisitions (24) (24)
----------------- -----------------
Net cash used in investing activities (1,304) (2,901)
----------------- -----------------
Cash flows from financing activities:
Net borrowings (repayments) on notes payable 1,506 (71)
Net proceeds from issuance of common stock 20 253
Income tax benefit from stock option exercises 55 114
----------------- -----------------
Net cash provided by financing activities 1,581 296
----------------- -----------------
Net change in cash and cash equivalents (1,747) 656
Cash and cash equivalents at beginning of period 13,491 8,079
----------------- -----------------
Cash and cash equivalents at end of period $ 11,744 $ 8,735
================= =================
Supplemental disclosures of cash flow information:
Interest paid $ 79 $ 78
Income taxes paid 2,956 843
================= =================
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
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.
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 8,735,973 for the three months ended March 31, 1997 and 8,843,934
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 9,611,152 shares for the three months ended March 31, 1997 and
9,517,007 shares for the comparable period in 1998.
- 8 -
<PAGE>
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
------------------------------------
Three Months Ended
March 31,
------------------------------------
1997 1998
---------------- -----------------
Statement of Income Data:
Net revenues:
<S> <C> <C>
Desktop products 73% 72%
Large System products 16% 15%
Other products and services 11% 13%
---------------- -----------------
Net revenues 100% 100%
Cost of revenues 9% 9%
---------------- -----------------
Gross profit 91% 91%
---------------- -----------------
Operating expenses:
Sales and marketing 46% 50%
Product development 16% 17%
General and administrative 12% 6%
---------------- -----------------
Operating expenses 74% 73%
---------------- -----------------
Operating income 17% 18%
Other income (expense):
Net interest income (expense) -- --
Other expense -- (1%)
---------------- -----------------
Other income (expense) -- (1%)
---------------- -----------------
Income before income taxes 17% 17%
Income tax expense 6% 6%
---------------- -----------------
Net income 11% 11%
================ =================
</TABLE>
Comparison of Three Months Ended March 31, 1997 to Three Months Ended
March 31, 1998.
Net Revenues. Net Revenues were $27,312,000 and $28,500,000 for the three months
ended March 31, 1997 and 1998, respectively, an increase of 4%. Revenues from
products designed for desktop computers ("Desktop products") increased $764,000
(4%) over the corresponding period in 1997. In addition, revenues from annual
license renewals of Desktop products increased by $500,000, reflecting a
$208,000 increase in annual
- 9 -
<PAGE>
license renewals for SPSS for Windows. Revenues from products designed for
mainframes, minicomputers, and UNIX workstations ("Large System products")
decreased 1% over the corresponding period in 1997. Other products and services
revenues increased 14% due to the increase in training revenue and revenues
received from publications and student products. Revenues for the first 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 $2,589,000 and $2,435,000 in the three months ended March
31, 1997 and 1998, respectively, a decrease of 6%. Such costs decreased due to
lower publication cost of goods sold 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 $12,682,000 and
$14,281,000 in the three months ended March 31, 1997 and 1998, respectively, an
increase of 13%. This increase was due to the expansion of the domestic and
international sales organizations and increased media placement and promotional
costs. Such expenses increased from 46% to 50% of net revenues.
Product Development. Product development expenses were $4,345,000 and $4,954,000
(net of capitalized software development costs of $403,000 and $516,000) in the
three months ended March 31, 1997 and 1998, respectively, an increase of 14%. 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 $459,000 and $451,000, respectively. The increase in product
development expenses was primarily due to the higher cost of development
personnel, additions to the product development staff, recruitment expense, and
network services expense. As a percentage of net revenues, product development
expenses increased from 16% to 17%, respectively.
General and Administrative. General and administrative expenses were $3,266,000
and $1,785,000 in the three months ended March 31, 1997 and 1998, respectively,
a decrease of 45%. 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 6%.
Net Interest Income. Net interest income was $109,000 and $28,000 in the three
months ended March 31, 1997 and 1998, respectively, a decrease of 74%. This
unfavorable variance was primarily due to lower interest earned on short-term
investments resulting from lower cash balances in the three months ended March
31,1998 compared to March 31, 1997.
Other (Expense). Other (expense) was ($22,000) and ($162,000) for the three
months ended March 31, 1997 and 1998, respectively. Such transactions consist of
foreign currency transaction losses.
- 10 -
<PAGE>
Provision for Income Taxes. Provision for income taxes was $1,603,000 and
$1,685,000 for the three months ended March 31, 1997 and 1998, respectively,
reflecting effective tax rates of 35.5% and 34.3%, respectively.
Liquidity and Capital Resources
The Company had no long-term debt as of March 31, 1998 and held approximately
$8,735,000 in cash and cash equivalents.
Funds in the first three months of 1998 were used in operations and for payments
related to the Company's acquisition 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.
The Company currently has an available $5,000,000 unsecured line of credit with
Bank of America N.T.S.A. ("B of A"), under which borrowings bear interest at the
reference rate (currently 8.50%). As of March 31, 1998, the Company had no
borrowings under this line of credit. The Company's credit agreement with B of A
requires the Company to comply with certain specified financial ratios and
tests, and, among other things, restricts the Company's ability to (i) pay
dividends or make distributions, (ii) incur additional indebtedness, (iii)
create liens on assets, (iv) make investments, (v) engage in mergers,
acquisitions or consolidations, (vi) sell assets and (vii) engage in certain
transactions with affiliates.
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.
- 11 -
<PAGE>
International Operations
Significant growth in the Company's international operations continued during
the first quarter of 1998. The portion of revenues attributable to international
operations was negatively affected by changes in foreign currency exchange
rates. Net corporate revenues increased 4% in the three months ended March 31,
1998, when compared to the three months ended March 31, 1997. Net of the effects
of changes in foreign currency rates, the increase would have been approximately
7%.
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, change 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.
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 5. Recent Developments
The Company is currently under negotiations to renew its agreement with
Prentice-Hall, Inc.
-12-
<PAGE>
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 Second Amendment to Credit Agreement ** 4.3
10.1 Change of Control Agreement between SPSS Inc.
and Jack Noonan
10.2 Change of Control Agreement between SPSS Inc.
and Edward Hamburg
10.3 Change of Control Agreement between SPSS Inc.
and Louise Rehling
10.4 Change of Control Agreement between SPSS Inc.
and Susan Phelan
10.5 Change of Control Agreement between SPSS Inc.
and Mark Battaglia
10.6 Change of Control Agreement between SPSS Inc.
and Ian Durrell
10.7 Consulting Agreement ** 10.22
15.1 Acknowledgment of Independent Certified
Public Accountants Regarding Independent
Auditors' Review Report
27.1 Financial Data Schedule
27.1a Financial Data Schedule
</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' Annual Report on Form 10-K for the Year Ended
December 31, 1997
- 13 -
<PAGE>
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Company during
the fiscal quarter ended March 31, 1998
- 14 -
<PAGE>
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: May 15, 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: May 15, 1998 By: /s/ Edward Hamburg
-----------------------
Edward Hamburg
Executive Vice-President, Corporate
Operations and Chief Financial Officer
- 15 -
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential Page
Number Description of Document Number
- ------ ----------------------- ---------------
<S> <C> <C>
10.1 Change of Control Agreement between SPSS Inc. 18
and Jack Noonan
10.2 Change of Control Agreement between SPSS Inc. 25
and Edward Hamburg
10.3 Change of Control Agreement between SPSS Inc. 32
and Louise Rehling
10.4 Change of Control Agreement between SPSS Inc. 39
and Susan Phelan
10.5 Change of Control Agreement between SPSS Inc. 46
and Mark Battaglia
10.6 Change of Control Agreement between SPSS Inc. 53
and Ian Durrell
15.1 Acknowledgement of Independent Certified Public 60
Accountants Regarding Independent Auditors' Review
Report
27.1 Financial Data Schedule 61
27.1a Financial Data Schedule 62
</TABLE>
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EXHIBIT 10.1
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
JACK NOONAN AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Jack_Noonan, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the President and Chief
Executive Officer of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as President and
Chief Executive Officer and to provide the Employee with the benefits set forth
herein in consideration of the Employee's continued employment, and the Employee
is willing to continue his employment as an employee of SPSS and enter into this
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this
<PAGE>
subsection (a): (i) any acquisition of common stock or securities convertible
into common stock directly from SPSS, or (ii) any acquisition of common stock or
securities convertible into common stock by any employee benefit plan (or
related trust) sponsored or maintained by SPSS.
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee
- 2 -
<PAGE>
shall receive an employment agreement which provides for the following upon
involuntary termination without cause or Constructive Termination after the
Effective Date of the Change of Control and within two (2) years after the
Change of Control: (1) a severance package equal to the greater of (i) the
aggregate cash compensation received in the immediately preceding fiscal year or
(ii) two times the Employee's base salary received in the immediately preceding
fiscal year; and (2) in the event of a Constructive Termination, the option to
terminate employment while still receiving the severance package referred to in
2(a)(1) above. If Employee is hired for a period of less than one year, the
provisions of Constructive Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the
- 3 -
<PAGE>
SPSS Option Plan prior to the Change of Control. If Employee shall be hired for
at least a one-year period, by the acquiring Public Company with an employment
package equal to or greater than the larger of (i) the total cash compensation
which Employee received in the fiscal year immediately preceding the year of the
Effective Date of a Change of Control or (ii) two times the Employee's base
salary received in the immediately preceding fiscal year, Employee shall receive
an employment agreement which provides the following upon the occurrence of an
involuntary termination without Cause or Constructive Termination after the
Effective Date of the Change of Control and within two (2) years after the
Change of Control: (1) a severance package equal to the greater of (i) the
aggregate cash compensation received in the immediately preceding fiscal year or
(ii) two times the Employee's base salary received in the immediately preceding
fiscal year; (2) immediate accelerated vesting of all previously unvested
Replacement Options; and (3) in the event of a Constructive Termination, the
option to terminate employment while still receiving the severance package
referred to in 3(a)(i) above. If Employee is hired for a period less than one
year, the provisions of Constructive Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
- 4 -
<PAGE>
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a Change of Control in addition to the benefits
set forth above in Sections 2 and 3, the Employee shall continue to receive, at
the cost of the employer, the same health and welfare benefits (in effect at any
time one hundred twenty (120) days prior to the Effective Date of a Change of
Control), but only to the extent each plan which governs the benefits permits
participation by terminated employees, for a period of eighteen (18) months
following the date of involuntary termination without Cause or Constructive
Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
- 5 -
<PAGE>
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement. 8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
- 6 -
<PAGE>
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: Chairman
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/JACK NOONAN
Jack Noonan
SPSS Inc.
By:/s/NORMAN NIE
Name: Norman Nie
Its: Chairman
- 7 -
EXHIBIT 10.2
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
EDWARD HAMBURG AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Edward Hamburg, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the Executive Vice President
of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as Executive Vice
President and to provide the Employee with the benefits set forth herein in
consideration of the Employee's continued employment, and the Employee is
willing to continue his employment as an employee of SPSS and enter into this
Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this subsection (a): (i) any acquisition of common
stock or securities convertible into common stock directly from SPSS, or (ii)
any acquisition of common stock or securities convertible into common stock by
any employee benefit plan (or related trust) sponsored or maintained by SPSS.
<PAGE>
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides for the following upon involuntary termination without
cause or Constructive Termination after the Effective Date of the Change of
Control and within two (2) years after the Change of Control: (1) a severance
package equal to the greater of (i) the aggregate cash compensation received in
the immediately preceding fiscal year or (ii) two times the Employee's base
salary received in the immediately
- 2 -
<PAGE>
preceding fiscal year; and (2) in the event of a Constructive Termination, the
option to terminate employment while still receiving the severance package
referred to in 2(a)(1) above. If Employee is hired for a period of less than one
year, the provisions of Constructive Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the SPSS Option Plan prior to the Change of
Control. If Employee shall be hired for at least a one-year period, by the
acquiring Public Company with an employment package equal to or greater than the
larger of (i) the total cash compensation which Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of Control
or (ii) two times the Employee's base salary received in the immediately
preceding fiscal year,
- 3 -
<PAGE>
Employee shall receive an employment agreement which provides the following upon
the occurrence of an involuntary termination without Cause or Constructive
Termination after the Effective Date of the Change of Control and within two (2)
years after the Change of Control: (1) a severance package equal to the greater
of (i) the aggregate cash compensation received in the immediately preceding
fiscal year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year; (2) immediate accelerated vesting of all
previously unvested Replacement Options; and (3) in the event of a Constructive
Termination, the option to terminate employment while still receiving the
severance package referred to in 3(a)(i) above. If Employee is hired for a
period less than one year, the provisions of Constructive Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a Change of Control in addition to the benefits
set forth above in Sections 2 and 3, the Employee shall continue to receive, at
the cost of the employer, the same health and welfare benefits (in effect at any
time one hundred twenty (120) days prior to the Effective Date of a
- 4 -
<PAGE>
Change of Control), but only to the extent each plan which governs the benefits
permits participation by terminated employees, for a period of eighteen (18)
months following the date of involuntary termination without Cause or
Constructive Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
- 5 -
<PAGE>
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement.
8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
- 6 -
<PAGE>
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/EDWARD HAMBURG
EDWARD HAMBURG
SPSS Inc.
By:/s/JACK NOONAN
Name: Jack Noonan
Its: President and Chief
Executive Officer
- 7 -
EXHIBIT 10.3
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
LOUISE REHLING AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Louise Rehling, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the Executive Vice President
Product Development of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as Executive Vice
President Product Development and to provide the Employee with the benefits set
forth herein in consideration of the Employee's continued employment, and the
Employee is willing to continue his employment as an employee of SPSS and enter
into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this subsection (a): (i) any acquisition of common
stock or securities convertible into common stock directly from SPSS, or (ii)
any acquisition of common stock or securities convertible into common stock by
any employee benefit plan (or related trust) sponsored or maintained by SPSS.
<PAGE>
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides for the following upon involuntary termination without
cause or Constructive Termination after the Effective Date of the Change of
Control and within two (2) years after the Change of Control: (1) a severance
package equal to the greater of (i) the aggregate cash compensation received in
the immediately preceding fiscal year or (ii) two times the Employee's base
salary received in the immediately
- 2 -
<PAGE>
preceding fiscal year; and (2) in the event of a Constructive Termination, the
option to terminate employment while still receiving the severance package
referred to in 2(a)(1) above. If Employee is hired for a period of less than one
year, the provisions of Constructive Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the SPSS Option Plan prior to the Change of
Control. If Employee shall be hired for at least a one-year period, by the
acquiring Public Company with an employment package equal to or greater than the
larger of (i) the total cash compensation which Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of Control
or (ii) two times the Employee's base salary received in the immediately
preceding fiscal year,
- 3 -
<PAGE>
Employee shall receive an employment agreement which provides the following upon
the occurrence of an involuntary termination without Cause or Constructive
Termination after the Effective Date of the Change of Control and within two (2)
years after the Change of Control: (1) a severance package equal to the greater
of (i) the aggregate cash compensation received in the immediately preceding
fiscal year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year; (2) immediate accelerated vesting of all
previously unvested Replacement Options; and (3) in the event of a Constructive
Termination, the option to terminate employment while still receiving the
severance package referred to in 3(a)(i) above. If Employee is hired for a
period less than one year, the provisions of Constructive Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a Change of Control in addition to the benefits
set forth above in Sections 2 and 3, the Employee shall continue to receive, at
the cost of the employer, the same health and welfare benefits (in effect at any
time one hundred twenty (120) days prior to the Effective Date of a Change of
Control), but only to the extent each plan which governs the benefits permits
- 4 -
<PAGE>
participation by terminated employees, for a period of eighteen (18) months
following the date of involuntary termination without Cause or Constructive
Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
- 5 -
<PAGE>
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement.
8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
- 6 -
<PAGE>
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/LOUISE REHLING
LOUISE REHLING
SPSS Inc.
By:/s/JACK NOONAN
Name: Jack Noonan
Its: President and Chief
Executive Officer
- 7 -
EXHIBIT 10.4
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
SUSAN PHELAN AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Susan Phelan, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the Executive Vice President
Products & Services of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as Executive Vice
President Products & Services and to provide the Employee with the benefits set
forth herein in consideration of the Employee's continued employment, and the
Employee is willing to continue his employment as an employee of SPSS and enter
into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this subsection (a): (i) any acquisition of common
stock or securities convertible into common stock directly from SPSS, or (ii)
any acquisition of common stock or securities convertible into common stock by
any employee benefit plan (or related trust) sponsored or maintained by SPSS.
<PAGE>
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides for the following upon involuntary termination without
cause or Constructive Termination after the Effective Date of the Change of
Control and within two (2) years after the Change of Control: (1) a severance
package equal to the greater of (i) the aggregate cash compensation received in
the immediately preceding fiscal year or (ii) two times the Employee's base
salary received in the immediately
- 2 -
<PAGE>
preceding fiscal year; and (2) in the event of a Constructive Termination, the
option to terminate employment while still receiving the severance package
referred to in 2(a)(1) above. If Employee is hired for a period of less than one
year, the provisions of Constructive Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the SPSS Option Plan prior to the Change of
Control. If Employee shall be hired for at least a one-year period, by the
acquiring Public Company with an employment package equal to or greater than the
larger of (i) the total cash compensation which Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of Control
or (ii) two times the Employee's base salary received in the immediately
preceding fiscal year,
- 3 -
<PAGE>
Employee shall receive an employment agreement which provides the following upon
the occurrence of an involuntary termination without Cause or Constructive
Termination after the Effective Date of the Change of Control and within two (2)
years after the Change of Control: (1) a severance package equal to the greater
of (i) the aggregate cash compensation received in the immediately preceding
fiscal year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year; (2) immediate accelerated vesting of all
previously unvested Replacement Options; and (3) in the event of a Constructive
Termination, the option to terminate employment while still receiving the
severance package referred to in 3(a)(i) above. If Employee is hired for a
period less than one year, the provisions of Constructive Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a Change of Control in addition to the benefits
set forth above in Sections 2 and 3, the Employee shall continue to receive, at
the cost of the employer, the same health and welfare benefits (in effect at any
time one hundred twenty (120) days prior to the Effective Date of a
- 4 -
<PAGE>
Change of Control), but only to the extent each plan which governs the benefits
permits participation by terminated employees, for a period of eighteen (18)
months following the date of involuntary termination without Cause or
Constructive Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
- 5 -
<PAGE>
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement.
8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
- 6 -
<PAGE>
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/SUSAN PHELAN
SUSAN PHELAN
SPSS Inc.
By:/s/JACK NOONAN
Name: Jack Noonan
Its: President and Chief
Executive Officer
- 7 -
EXHIBIT 10.5
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
MARK BATTAGLIA AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Mark Battaglia, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the Executive Vice President
Corporate Marketing of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as Executive Vice
President Corporate Marketing and to provide the Employee with the benefits set
forth herein in consideration of the Employee's continued employment, and the
Employee is willing to continue his employment as an employee of SPSS and enter
into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this subsection (a): (i) any acquisition of common
stock or securities convertible into common stock directly from SPSS, or (ii)
any acquisition of common stock or securities convertible
<PAGE>
into common stock by any employee benefit plan (or related trust) sponsored or
maintained by SPSS.
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides for the following upon involuntary termination without
cause or Constructive Termination after the Effective Date of the Change
- 2 -
<PAGE>
of Control and within two (2) years after the Change of Control: (1) a severance
package equal to the greater of (i) the aggregate cash compensation received in
the immediately preceding fiscal year or (ii) two times the Employee's base
salary received in the immediately preceding fiscal year; and (2) in the event
of a Constructive Termination, the option to terminate employment while still
receiving the severance package referred to in 2(a)(1) above. If Employee is
hired for a period of less than one year, the provisions of Constructive
Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the SPSS Option Plan prior to the Change of
Control. If Employee shall be hired for at least a one-year period, by the
acquiring Public Company with an employment package equal to or
- 3 -
<PAGE>
greater than the larger of (i) the total cash compensation which Employee
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides the following upon the occurrence of an involuntary
termination without Cause or Constructive Termination after the Effective Date
of the Change of Control and within two (2) years after the Change of Control:
(1) a severance package equal to the greater of (i) the aggregate cash
compensation received in the immediately preceding fiscal year or (ii) two times
the Employee's base salary received in the immediately preceding fiscal year;
(2) immediate accelerated vesting of all previously unvested Replacement
Options; and (3) in the event of a Constructive Termination, the option to
terminate employment while still receiving the severance package referred to in
3(a)(i) above. If Employee is hired for a period less than one year, the
provisions of Constructive Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a
- 5 -
<PAGE>
Change of Control in addition to the benefits set forth above in Sections 2 and
3, the Employee shall continue to receive, at the cost of the employer, the same
health and welfare benefits (in effect at any time one hundred twenty (120) days
prior to the Effective Date of a Change of Control), but only to the extent each
plan which governs the benefits permits participation by terminated employees,
for a period of eighteen (18) months following the date of involuntary
termination without Cause or Constructive Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
- 6 -
<PAGE>
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement.
8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
- 7 -
<PAGE>
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/MARK BATTAGLIA
MARK BATTAGLIA
SPSS Inc.
By:/s/JACK NOONAN
Name: Jack Noonan
Its: President and Chief
Executive Officer
- 8 -
EXHIBIT 10.6
SENIOR MANAGEMENT
CHANGE OF CONTROL AGREEMENT BETWEEN
IAN DURRELL AND
SPSS INC.
THIS CHANGE OF CONTROL AGREEMENT, dated as of May 1, 1998 (the
"Agreement"), is by and between SPSS Inc., a Delaware corporation having its
principal offices at 444 N. Michigan Avenue, Chicago, Illinois 60611 ("SPSS" or
the "Company"), and Ian Durrell, a senior management employee of SPSS (the
"Employee").
WHEREAS, the Employee is presently serving as the Executive Vice President
Premier Accounts Group of SPSS; and
WHEREAS, SPSS desires to continue the Employee's services as Executive Vice
President Premier Accounts Group and to provide the Employee with the benefits
set forth herein in consideration of the Employee's continued employment, and
the Employee is willing to continue his employment as an employee of SPSS and
enter into this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Certain Defined Terms.
(a) "Cause" shall mean material nonperformance by the Employee of the
Employee's duties or material injury or harm to the Company or its successor
caused by the Employee.
(b) "Change of Control," as used herein, shall mean any one or more of the
following: (i) the accumulation, by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) not previously owning common stock of the
Company, of Fifteen Percent (15%) or more of the shares of the then outstanding
common stock of SPSS (the "Outstanding Common Stock"), (ii) a merger or
consolidation of SPSS in which SPSS does not survive as an independent public
company, (iii) a sale of all or substantially all of the assets of SPSS, (iv) a
triggering event under any Rights Agreement of SPSS, as such agreement may exist
from time to time, or (v) a liquidation or dissolution of SPSS; provided,
however, that the following acquisitions shall not constitute a Change of
Control for the purposes of this subsection (a): (i) any acquisition of common
stock or securities convertible into common stock directly from SPSS, or (ii)
any acquisition of common stock or securities convertible into common stock by
any employee benefit plan (or related trust) sponsored or maintained by SPSS.
<PAGE>
(c) "Constructive Termination," as used herein, shall mean (i) a reduction,
for a reason other than Cause, in annualized cash compensation by 20% or more
(compared to the cash compensation which the Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of
Control) which occurs during any twelve month period beginning on or after the
Effective Date of any Change of Control referred to above and ending on or prior
to the later of (x) the second anniversary date of the Effective Date of any
Change of Control referred to above or (y) the last day of vesting for any SPSS
options then held by the Employee which options have not vested as of the
Effective Date of any Change of Control referred to above; or (ii) any action
(an "Action"), for a reason other than Cause, by SPSS which results in a
diminution in any material respect of the Employee's position, authority, duties
or responsibilities as the same existed immediately prior to the Effective Date
of the Change of Control referred to above. Further, in order for it to be a
Constructive Termination, either (i) or (ii) above must be followed within
ninety (90) days with the resignation of the Employee.
A change in the Employee's title or a transfer to a different division or
subsidiary, whether publicly or privately held, shall not in and of itself
constitute an Action. Rather, the focus turns on the substance of the Employee's
duties.
(d) "Effective Date," as used herein, shall mean the first date during
which a Change of Control (as defined in Section 1(b)) occurs.
2. Change of Control in a Transaction with a Private Company. In the event
a Change of Control occurs as the result of a transaction between SPSS and a
company whose common stock is not publicly traded on a domestic national stock
exchange, the NASDAQ national market, or their respective successors or
equivalents (a "Private Company"), the Employee shall have the rights and
benefits set forth below:
(a) Continued Employment. If upon the occurrence of Change of Control
between SPSS and a Private Company, the Employee is hired for at least a
one-year period, with an employment package equal to or greater than the larger
of (i) the total cash compensation received by the Employee in the immediately
preceding full fiscal year or (ii) two times the Employee's base salary received
in the immediately preceding fiscal year, all of Employee stock options shall
vest on the Effective Date on which the Change of Control occurs and shall be
cashed out at the transaction value on the occurrence of the transaction with
the Private Company on or within ninety (90) days following a Change of Control.
If Employee shall be hired with an employment package equal to or greater than
the larger of (i) the total cash compensation received by Employee in the
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year, Employee shall receive an employment
agreement which provides for the following upon involuntary termination without
cause or Constructive Termination after the Effective Date of the Change of
Control and within two (2) years after the Change of Control: (1) a severance
package equal to the greater of (i) the aggregate cash compensation received in
the immediately
- 2 -
<PAGE>
preceding fiscal year or (ii) two times the Employee's base salary received in
the immediately preceding fiscal year; and (2) in the event of a Constructive
Termination, the option to terminate employment while still receiving the
severance package referred to in 2(a)(1) above. If Employee is hired for a
period of less than one year, the provisions of Constructive Termination apply.
(b) Involuntary Termination; Constructive Termination Upon a Change of
Control. If upon the occurrence of Change of Control between SPSS and a Private
Company, there is either an involuntary termination of Employee without Cause or
Constructive Termination, the vesting of all Employee stock options shall be
accelerated to the Effective Date on which the Change of Control occurs and
shall be cashed out at the transaction value on the occurrence of the
transaction with the Private Company on or within ninety (90) days from the
occurrence of the Change of Control. Employee shall receive a one (1) year
severance package equal to the greater of (i) the Employee's cash compensation
received in the fiscal year immediately preceding the year of the Effective Date
of a Change of Control or (ii) two times the Employee's base salary received in
the fiscal year immediately preceding the year of the Effective Date of a Change
of Control.
(c) Voluntary Resignation. If upon the occurrence of Change of Control
between SPSS and a Private Company, Employee voluntarily resigns, all of
Employee's unvested SPSS stock options shall be forfeited and all of Employee's
vested options shall be cashed out at the transaction value on the occurrence of
the transaction with the Private Company on or within ninety (90) days following
a Change of Control.
3. Change of Control in a Transaction With a Public Company. In the event a
Change of Control occurs between SPSS and a company whose common stock is
publicly traded on the domestic national stock exchange, the NASDAQ national
market, or their respective successors and equivalents (a "Public Company"), the
Employee shall have the rights and benefits set forth below:
(a) Continued Employment. If upon the occurrence of a Change of Control
between SPSS and a Public Company, the Employee is hired for at least a one-year
period, with an employment package equal to or greater than the larger of (i)
the total cash compensation received by the Employee in the immediately
preceding year or (ii) two times the Employee's base salary received in the
immediately preceding fiscal year, all of Employee's stock options shall either
(i) vest on the Effective Date on which the Change of Control occurs and shall
be cashed out at the transaction value on or within ninety (90) days following a
Change of Control; or (ii) shall be converted into stock options of the
acquiring Public Company on substantially equivalent economic terms
("Replacement Options"). If Replacement Options are granted, they shall continue
to vest at the same rate as under the SPSS Option Plan prior to the Change of
Control. If Employee shall be hired for at least a one-year period, by the
acquiring Public Company with an employment package equal to or greater than the
larger of (i) the total cash compensation which Employee received in the fiscal
year immediately preceding the year of the Effective Date of a Change of Control
or
- 3 -
<PAGE>
(ii) two times the Employee's base salary received in the immediately preceding
fiscal year, Employee shall receive an employment agreement which provides the
following upon the occurrence of an involuntary termination without Cause or
Constructive Termination after the Effective Date of the Change of Control and
within two (2) years after the Change of Control: (1) a severance package equal
to the greater of (i) the aggregate cash compensation received in the
immediately preceding fiscal year or (ii) two times the Employee's base salary
received in the immediately preceding fiscal year; (2) immediate accelerated
vesting of all previously unvested Replacement Options; and (3) in the event of
a Constructive Termination, the option to terminate employment while still
receiving the severance package referred to in 3(a)(i) above. If Employee is
hired for a period less than one year, the provisions of Constructive
Termination apply.
If a Constructive Termination or an involuntary Termination without Cause
occurs two (2) years or more after the Effective Date of a Change of Control,
the vesting of all previously unvested Replacement Options shall be accelerated
to the date on which the Employee is subject to a Constructive Termination or
involuntary termination.
(b) Involuntary Termination/Constructive Termination Upon a Change of
Control. If, upon the occurrence of a Change of Control between SPSS and a
Public Company there is either an involuntary termination of an Employee without
Cause or a Constructive Termination of Employee, (i) the vesting of all of
Employee's stock options shall be accelerated to the Effective Date on which the
Change of Control occurs, and shall be cashed out at the Change of Control
transaction value or must be exercised by Employee within ninety (90) days from
the occurrence of a Change of Control (if there is a Change of Control with no
transaction) and (ii) Employee shall receive a one (1) year severance package
equal to the greater of (A) the cash compensation received by Employee in the
fiscal year immediately preceding the year of the Effective Date of a Change of
Control or (B) two times the Employee's base salary received in the fiscal year
immediately preceding the year of the Effective Date of a Change of Control.
(c) Voluntary Resignation on Change of Control. If upon the occurrence of a
Change of Control between SPSS and a Public Company, Employee voluntarily
resigns, at the time of the Effective Date of the Change of Control, all
unvested SPSS stock options held by Employee shall be forfeited, and all vested
options shall be cashed out at the Change of Control transaction value or must
be exercised by Employee within ninety (90) days from the occurrence of such
Change of Control (if there is a Change of Control with no transaction).
4. Health and Welfare Benefits. Notwithstanding the rights and obligations
as outlined in Sections 2 or 3 above, if Employee is involuntarily terminated
without Cause or is subject to a Constructive Termination on or after the
Effective Date of a Change of Control or within the later of two (2) years
following the Effective Date of a Change of Control in addition to the benefits
set forth above in Sections 2 and 3, the Employee shall continue to receive, at
the cost of the employer, the same health and welfare
- 4 -
<PAGE>
benefits (in effect at any time one hundred twenty (120) days prior to the
Effective Date of a Change of Control), but only to the extent each plan which
governs the benefits permits participation by terminated employees, for a period
of eighteen (18) months following the date of involuntary termination without
Cause or Constructive Termination.
5. Non-Compete.
(a) Employee hereby covenants and agrees that during the period of time he
collects a severance package, he shall not (i) directly or indirectly (whether
through a partnership of which the Employee is a partner or through any other
individual or entity in which Employee has any interest, legal or equitable),
engage in any business competitive with the business of SPSS (ii) directly or
indirectly (whether through a partnership of which Employee is a partner or
through any other individual or entity in which Employee has any interest, legal
or equitable), solicit or otherwise engage with any customers or clients of
SPSS, in any transactions which are in direct competition with the software
business of SPSS which SPSS did or could have engaged in with those customers or
clients, or (iii) directly or indirectly (whether through a partnership of which
Employee is a partner or through any other individual or entity in which
Employee has any interest, legal or equitable), assist any person in the
development, programming, servicing, maintenance, manufacture, sale, licensing,
distribution or marketing (including, without limitation, giving away software)
of software and related products in competition with SPSS' products, in each
case in the United States of America or any country where SPSS, or its
subsidiaries or affiliates are doing business with respect to SPSS products and
services and in each case excluding passive investment interests of less than
two percent (2%) in corporations whose stock is registered under the Securities
Exchange Act of 1934, as amended.
(b) Employee understands that a breach by him of this Section 5 may cause
substantial injury to SPSS, which may be irreparable and/or in amounts difficult
or impossible to ascertain, and that in the event Employee breaches this Section
5, SPSS shall have, in addition to all other remedies available in the event of
a breach of this Agreement, the right to injunctive or other equitable relief.
Further, Employee acknowledges and agrees that the restrictions and commitments
set forth in this Agreement are necessary to protect SPSS' legitimate interests
and are reasonable in scope, area and time, and that if, despite this
acknowledgment and agreement, at the time of the enforcement of any provision of
this Agreement a court of competent jurisdiction shall hold that the period or
scope of such provision is unreasonable under the circumstances then existing,
the maximum reasonable period or scope under such circumstances shall be
substituted for the period or scope stated in such provision.
(c) Should Employee breach this Section 5, all severance payments shall
cease immediately, and SPSS shall be entitled to pursue all other available
legal or equitable remedies.
- 5 -
<PAGE>
(d) For purposes of Section 5, where the context admits, the term "SPSS"
includes SPSS Inc., its subsidiaries and all of their respective affiliated
entities and their successors and assigns.
6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made
and to be performed in Illinois, without giving effect to conflicts of law
principles.
7. Headings. The section headings of this Agreement are for reference only
and are to be given no effect in the construction or interpretation of this
Agreement.
8. Severability. If any part or provision of this Agreement shall be
declared invalid or unenforceable by a court of competent jurisdiction, said
provision or part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining parts or
provisions of this Agreement.
9. Waiver. Any party may waive compliance by another party with any of the
provisions of this Agreement. No waiver of any provision shall be construed as a
waiver of any other provision. Any waiver must be in writing.
10. Binding Effect; Assignment. This Agreement shall be binding on and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity (including any
employee or person engaged by SPSS in any capacity) not a party to this
Agreement. SPSS will require any successor (whether direct or indirect, by
merger, purchase, consolidation or otherwise) of SPSS to make an express
assumption of the obligations hereunder and cause any successor (whether direct
or indirect, by merger, purchase, consolidation or otherwise) of SPSS to agree
to perform all parts and provisions under this Agreement in the same manner and
to the same extent that SPSS would be required to perform it if no such
succession had taken place.
11. Counterparts. This Agreement may be signed in any number of
counterparts and all such counterparts shall be read together and construed as
but one and the same document.
12. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given when delivered personally, one day
after sent by recognized overnight courier, or five (5) days after deposit in
the United States mail, postage prepaid, registered or certified mail, return
receipt requested, to the parties at the following addresses (or to such other
address as a party may have specified by notice duly given to the other party in
accordance with this provision):
- 6 -
<PAGE>
If to the Employee:
At the Employee's then current business or residence address as shown on
the records of SPSS, with a copy to such other person as the Employee may have
specified by notice duly given to SPSS in accordance with this provision.
If to SPSS:
SPSS Inc.
444 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President
With a copy to:
Ross & Hardies
150 N. Michigan Avenue
Chicago, Illinois 60601-7567
Attention: Lawrence R. Samuels, Esq.
IN WITNESS WHEREOF the parties have executed this Agreement on the date
first written above.
Employee
/s/IAM DURRELL
IAN DURRELL
SPSS Inc.
By:/s/JACK NOONAN
Name: Jack Noonan
Its: President and Chief
Executive Officer
- 7 -
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. 33-325869,
33-73130, 33- 80799, 33-73120, and 33-74402) of SPSS Inc., we acknowledge our
awareness of the use therein of our report dated April 28, 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 account
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
May 13, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPSS INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 31, 1998 AND CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<SECURITIES> 0 0
<RECEIVABLES> 0 28,768
<ALLOWANCES> 0 1,879
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SPSS INC.
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT MARCH 31, 1997 AND CONSOLIDATED
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000869570
<NAME> SPSS INC.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998
<PERIOD-END> MAR-31-1998 DEC-31-1998
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<INCOME-PRETAX> 4,517 4,517
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<INCOME-CONTINUING> 2,914 2,914
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