FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ____________________
Commission File Number 0-19024
Symix Systems, Inc.
(Exact name of registrant as specified in its charter)
Ohio 31-1083175
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2800 Corporate Exchange Drive
Columbus, Ohio 43231
(Address of principal executive officer) (Zip Code)
(614) 523-7000
(Registrant's telephone number, including area code)
N/A
(Former name, former address fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required 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
such filing requirements for the past 90 days.
YES X NO __
At May 13, 1996, there were 2,757,370 shares outstanding of the Company's
Common Stock with a stated value per share of $.01.
TOTAL OF SEQUENTIALLY NUMBERED PAGES: 47
EXHIBIT INDEX ON PAGE: 13
<PAGE>
SYMIX SYSTEMS, INC.
INDEX
Part I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets ............................. 3 - 4
March 31, 1996 (unaudited)
June 30, 1995
Consolidated Statements of Operations (unaudited) ....... 5
Three Months Ended March 31, 1996 and 1995
Nine Months Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows (unaudited) ....... 6 - 7
Nine Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited) .. 8
Item 2. Management's Discussion and Analysis .................. 9 - 10
of Financial Condition and Results of Operations
Part II. OTHER INFORMATION ............................................ 11
Item 6. Exhibits and Reports on Form 8-K ...................... 11
SIGNATURE ...................................................... 12
-2-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, June 30,
1996 1995
---------- ---------
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................... $ 6,393 $ 4,498
Trade accounts receivable, less allowance for
doubtful accounts of $502,000 at March 31, 1996
and $550,000 at June 30, 1995 ......................... 9,900 10,917
Inventories ............................................. 446 272
Prepaid expenses ........................................ 378 296
Other receivables ....................................... 205 153
Refundable income taxes ................................. 237
Deferred income taxes ................................... 284 337
------- -------
TOTAL CURRENT ASSETS ............................... 17,606 16,710
OTHER ASSETS
Purchased and developed software, net of accumulated
amortization of $3,822,000 at March 31, 1996
and $3,150,000 at June 30, 1995 ....................... 4,558 2,531
Deferred income taxes ................................... 921 892
Deposits and other assets ............................... 434 552
------- -------
5,913 3,975
EQUIPMENT AND IMPROVEMENTS
Furniture and fixtures .................................. 2,242 2,235
Computer and other equipment ............................ 7,555 6,713
Leasehold improvements .................................. 1,187 1,190
------- -------
10,984 10,138
Less allowance for depreciation ......................... 6,109 4,754
------- -------
4,875 5,384
------- -------
TOTAL ASSETS .......................................... $28,394 $26,069
======= =======
See notes to consolidated financial statements
-3-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands)
March 31, June 30,
1996 1995
--------- --------
(unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses ........... $ 3,394 $ 3,908
Customer deposits ............................... 517 670
Deferred revenue ................................ 5,603 5,571
Income taxes payable ............................ 375
Current portion of lease obligations ............ 180 198
Current notes payable ........................... 500
-------- --------
TOTAL CURRENT LIABILITIES ................ 10,569 10,347
LEASE OBLIGATIONS, less current portion ............ 137
DEFERRED INCOME TAXES .............................. 1,469 1,077
SHAREHOLDERS' EQUITY
Common stock, authorized 5,000,000 shares;
issued 2,909,470 shares at March 31, 1996,
and 2,874,564 at June 30, 1995; at stated
capital amounts of $.01 per share ............ 29 29
Capital in excess of stated value ............... 10,976 10,643
Retained earnings ............................... 6,671 5,156
-------- --------
17,676 15,828
Less: Cost of common shares in treasury,
152,100 shares at March 31, 1996
and June 30, 1995, at cost .................... (1,320) (1,320)
-------- --------
TOTAL SHAREHOLDERS' EQUITY ................ 16,356 14,508
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY ..................... $ 28,394 $ 26,069
======== ========
See notes to consolidated financial statements
-4-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
Three Months Nine Months
Ended March 31, Ended March 31,
--------------- ---------------
1996 1995 1996 1995
---- ---- ---- ----
License fees ....................... $ 5,988 $ 5,466 $17,177 $ 18,625
Service, maintenance and support ... 5,177 5,147 15,378 12,996
------- -------- ------- --------
Net revenue ................... 11,165 10,613 32,555 31,621
License fees ....................... 1,565 1,892 4,839 5,629
Service, maintenance and support ... 2,193 2,145 6,286 5,812
------- -------- ------- --------
Cost of revenue ............... 3,758 4,037 11,125 11,441
------- -------- ------- --------
Gross margin ............... 7,407 6,576 21,430 20,180
------- -------- ------- --------
Selling, general and ............... 5,410 6,101 15,897 19,037
administrative
Research and product development ... 968 945 2,587 2,679
Restructuring and other unusual .... 506
charges
------- -------- ------- --------
Total expenses ............. 6,378 7,046 18,990 21,716
------- -------- ------- --------
Operating income (loss) .... 1,029 (470) 2,440 (1,536)
Interest and other income, net ..... 46 148 161 233
------- -------- ------- --------
Income (loss) before provision
(benefit) for income taxes ....... 1,075 (322) 2,601 (1,303)
Provision (benefit) for income ..... 430 (123) 1,041 (509)
taxes
------- -------- ------- --------
Net income (loss) .......... $ 645 ($ 199) $ 1,560 ($ 794)
======= ======== ======= ========
Earnings (loss) per share .. $ 0.23 ($ 0.07) $ 0.56 ($ 0.29)
======= ======== ======= ========
Weighted average number
of common and common
equivalent shares
outstanding .............. 2,857 2,696 2,786 2,748
======= ======== ======= ========
See notes to consolidated financial statements
-5-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months
Ended March 31,
-----------------
(unaudited)
1996 1995
------ ------
OPERATING ACTIVITIES
Net income (loss) .................................... $ 1,560 ($ 794)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization ...................... 2,035 1,886
Provision for losses on accounts ................... (48) 50
receivable
Provision for deferred income taxes ................ 416 (180)
Changes in operating assets and liabilities:
Trade accounts receivable .......................... 1,093 511
Prepaid expenses and other receivables ............. (134) (145)
Inventory .......................................... (174) 63
Deposits ........................................... 118 (60)
Accounts payable and accrued expenses .............. (514) 18
Customer deposits .................................. (153) 314
Deferred revenue ................................... 32 669
Income taxes payable/refundable .................... 612 (372)
Notes payable ...................................... 500
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES ............................... 5,343 1,960
See notes to consolidated financial statements
-6-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
Nine Months
Ended March 31,
--------------------
(unaudited)
1996 1995
---- ----
INVESTING ACTIVITIES
Purchase of equipment and improvements ....... (854) (2,098)
Additions to purchased and developed ......... (2,699) (950)
software ................................... ------ ------
NET CASH USED IN
INVESTING ACTIVITIES ......................... (3,553) (3,048)
FINANCING ACTIVITIES
Principal payments on long-term
obligations .................................... (154) (171)
Proceeds from issuance of common
stock and exercise of stock options ............ 333 21
Purchase of treasury stock ....................... (767)
------- -------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES ........................ 179 (917)
Effect of exchange rate changes .............. (74) 11
on cash ------- -------
Net Change in Cash ........................... 1,895 (1,994)
Cash at beginning of period ...................... 4,498 6,530
------- -------
CASH AT END OF PERIOD ........................ $ 6,393 $ 4,536
======= =======
See notes to consolidated financial statements
-7-
<PAGE>
SYMIX SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note A -- Accounting Policies and Presentation
The accompanying consolidated financial statements are unaudited; however, the
information contained herein reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations for the interim periods. All adjustments made were of a normal
recurring nature. These interim results of operations are not necessarily
indicative of the results to be expected for a full year.
The notes to the consolidated financial statements contained in the Symix
Systems, Inc and Subsidiaries' June 30, 1995 Annual Report to Shareholders
should be read in conjunction with these financial statements.
Reclassifications -- Certain fiscal 1995 amounts have been reclassified to
conform to the current period presentation.
Note B -- Restructuring and Other Non-Recurring Charges
The restructuring and other non-recurring charges of $506,000 were incurred
during the quarter ended September 30, 1995 with costs associated primarily
with severance payments and reorganizing the European sales channel.
-8-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company's revenues are derived from (i) licensing SYMIX software and (ii)
providing product support and related services. Product support is provided
pursuant to agreements that are generally renewed annually. Related services
consist of installation, implementation, training, consulting, programming and
systems integration services for SYMIX users.
The Company's results of operations have fluctuated on a quarterly basis. The
Company's expenses, with the principal exception of sales commissions and
certain components of cost of revenue, are generally fixed and do not vary
with revenue. As a result, any shortfall of actual revenue in a given quarter
would adversely affect net earnings for that quarter by a significant portion
of the shortfall.
Results of Operations
Net revenue was $11,165,000 for the three months ended March 31, 1996, an
increase of 5% from the same quarter of the previous year. License revenue
increased 10% from $5,466,000 for the same quarter last year to $5,988,000 at
March 31, 1996. This increase is primarily attributable to the increase in the
SYMIX software component of license fee revenue. Service and support revenue
were relatively consistent comparing the respective quarters' performance:
$5,177,000 for March 31, 1996, and $5,147,000 for March 31, 1995.
International revenues were comparable as well comprising 13% of net revenue
for both quarters.
For the nine months ended March 31, 1996, net revenue increased 3% to
$32,555,000 from $31,621,000 for the same period last year. The increase was
due to the growth in service revenue up 18% from the comparable period.
Cost of revenue declined from 38% of net revenue for the quarter ended March
31, 1995 to 34% in the current quarter. For the nine month period the
comparison results are similar, a slight decrease from 36% for the nine month
period ended March 31, 1995, to 34% for the period ended March 31, 1996.
Included in last year's third quarter cost of license fees is a special charge
of $154,000 for write-off of previously capitalized software development
costs. This accounts for a portion of the decline in the costs of revenue for
the comparable period.
Selling, general and administrative (SG&A) expense was $5,410,000 for the
quarter ended March 31, 1996, compared to $6,101,000 for the same time last
year, an 11% decline. For the respective nine month periods, SG&A expense was
$15,897,000 compared to $19,037,000, a decline of 16%. This decrease is
primarily due to more emphasis on controlling expenses and lower than planned
headcount during the current fiscal year. Additionally last year's third
quarter results included special charges of $171,000 related to staff
realignments and cost control measures.
Research and product development (R&D) expenditures, including amounts
capitalized for the three months ended March 31, 1996, were $1,327,000
compared to $1,331,000 for the same period last year. For the nine months
ended March 31, 1996, R&D expenses were $4,286,000 compared to $3,629,000 for
the same period last year. Capitalization of software development costs was
$359,000 and $1,699,000 for the three and nine month periods, respectively,
ended March 31, 1996, compared to $386,000 and $950,000 for the comparable
periods last year. In addition to the software development costs capitalized
this quarter is $1,000,000 for a purchase of existing technology. The
technology purchase aside, the increase in R&D expenditures for the nine month
period is attributable to the release of SYMIX Version 5.0. The new release
occurred in late March of 1996.
-9-
<PAGE>
Liquidity and Capital Resources
At March 31, 1996, the Company had working capital of $7,037,000 including
cash and cash equivalents of $6,393,000, compared to $6,363,000 including cash
and cash equivalents of $4,498,000 at June 30, 1995. Net accounts receivable
decreased from $10,917,000 at June 30, 1995, to $9,900,000 at March 31, 1996.
At March 31, 1996, the accounts receivable days sales outstanding were 81
compared to 97 at June 30, 1995.
The Company anticipates that existing sources of liquidity and cash flow from
operations will be sufficient to satisfy its operational objectives for the
next twelve months.
-10-
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings ............................................ None
Item 2. Changes in Securities ........................................ None
Item 3. Defaults Upon Senior Securities .............................. None
Item 4. Submission of Matters to a Vote .............................. None
of Security Holders
Item 5. Other Information ............................................ None
Item 6. Exhibits and Reports on Form 8-K
a) Index to Exhibits ...................................... Page 13
b) Reports on Form 8-K .................................... None
-11-
<PAGE>
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.
SYMIX SYSTEMS, INC.
Date: May 14, 1996 /s/ Lawrence W. DeLeon
----------------------
Lawrence W. DeLeon
Vice President, Chief
Financial Officer
and Secretary
-12-
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description Page
3(a) Amended Articles of Incorporated herein by
Incorporation of reference to Exhibit 3(a)
Symix Systems, Inc. to the Registration Statement
on Form S-1 of Registrant
filed February 12, 1991
(Registration No. 33-38878)
3(b) Amended Regulations of Incorporated herein by
Symix Systems, Inc. reference to Exhibit 3(b)
to the Registration Statement
on Form S-1 of Registrant
filed February 12, 1991
(Registration No. 33-38878)
10(a) Symix Systems, Inc. ...................... 14
Non-Qualified Stock Option
Plan for Key Executives
10(b) Employment Agreement between ............. 23
the Company and Stephen A.
Sasser.
10(c) Stock Option Agreement between ........... 36
the Company and Stephen A.
Sasser dated January 17, 1996.
11 Computation of Per Share Earnings ........ 46
27 Financial Data Schedule .................. 47
-13-
Exhibit 10(a)
SYMIX SYSTEMS, INC.
NON-QUALIFIED STOCK OPTION PLAN
FOR
KEY EXECUTIVES
Article One
Purpose
The purpose of this Symix Systems, Inc. Non-Qualified Stock
Option Plan For Key Executives (the "Plan") is to secure the benefits which
accrue from a program of offering to the Key Executives of Symix Systems, Inc.
(the "Company") and any Subsidiary the opportunity to acquire and increase
their proprietary interest in the success of the Company and thereby to attain
the objectives of this Plan which are:
(1) To obtain and retain the services of Participants;
(2) To encourage and reward efficient and profitable
operation; and
(3) To promote the development of the business of the Company.
Article Two
Definitions
For purposes of the Plan, the following terms when capitalized
shall have the meaning designated herein unless a different meaning is plainly
required by the context. Where applicable, the masculine pronoun shall mean or
include the feminine, and the singular shall include the plural.
(a) "Board of Directors" shall mean the Board of Directors of
the Company.
-14-
<PAGE>
(b) "Committee" shall mean the Compensation Committee of the
Board of Directors, whose membership shall be determined
as provided under Article Four.
(c) "Common Shares" shall mean the Common Shares of the
Company.
(d) "Company" shall mean Symix Systems, Inc., an Ohio
corporation.
(e) "Director" shall mean a member of the Board of Directors
of the Company.
(f) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time, or any successor
statute.
(g) "Key Executives" shall mean executive officers of the
Company or a Subsidiary who, in the opinion of the
Committee, have demonstrated a capacity for contributing
in a substantial measure to the success of the Company.
(h) "Participant" shall mean a Key Executive selected by the
Committee to receive stock options under the Plan.
(i) "Plan" shall mean the Symix Systems, Inc. Non-Qualified
Stock Option Plan for Key Executives as herein set forth.
(j) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(k) "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning
with the Company if, at the time of the granting of any
options under the Plan, each of the corporations (other
than the last corporation in the unbroken chain) owns
stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
-15-
<PAGE>
Article Three
Shares Subject to the Plan
200,000 of the Company's authorized but unissued Common Shares
shall be reserved for the purpose of granting options under the Plan to Key
Executives, in each case at a price set by the Committee at the time of the
granting of an option and upon such other terms and conditions as the
Committee might impose. In the event that options granted under the Plan shall
terminate, any shares covered thereby and not purchased thereunder may again
be the subject of an option under the Plan.
Article Four
Administration
The Plan shall be administered by the Committee. The Committee
shall consist of two or more Directors, as the Board of Directors may
determine. The Board of Directors may from time to time appoint members of the
Committee in substitution for or in addition to members previously appointed.
Subject to the express provisions of the Plan, the Committee may determine the
individuals to whom and the time or times at which options shall be granted,
the number of shares to be subject to each option, the period of each option,
the vested rights of each Participant in his options (including the vesting
schedule and acceleration of exercise of such options) and other terms and
conditions thereof and shall report its determination to the Board of
Directors. The proper officers of the Company shall carry such determination
into effect, but no action of the Committee or of an officer of the Company
shall bind or become binding upon the Company or create any obligation of the
Company whatsoever unless and until the Company shall have entered into a
written and definitive contract with a proposed Participant in respect of an
option for the purchase of shares of the Company and no such contract shall
obligate the Company to any person other than the Participant who is a party
to such written
-16-
<PAGE>
contract and to such persons, if any, as shall be expressly named or provided
for in such written contract. The Committee is authorized to construe and
interpret the Plan, to promulgate, amend and rescind rules and regulations
relating to the implementation of the Plan and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee may designate persons other than members of the Committee to carry
out its responsibilities under such conditions and limitations as it may
prescribe, except that the Committee may not delegate its authority with
regard to selection for, participation of and the granting of options to
persons subject to Section 16(a) and 16(b) of the Exchange Act. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration, or application of the Plan shall
be final, conclusive and binding upon all Participants and any person validly
claiming under or through Participants.
Article Five
Eligibility
Options may be granted only to those Key Executives as may from
time to time be designated by the Committee. Neither the provisions of the
Plan nor its adoption by the Board of Directors or the Committee shall be
deemed to give any person a contractual or other right to receive an option
under the Plan.
-17-
<PAGE>
Article Six
Option Price
The purchase price pursuant to which Common Shares may be
purchased under each option granted hereunder shall be fixed by the Committee.
Article Seven
Term of Option
The term of each option shall be fixed by the Committee, but in
no event shall any option permit the purchase of shares thereunder after the
tenth (10th) anniversary of the date on which the option is granted.
Article Eight
Exercise of Option
Subject to the provisions of the written option agreement
pursuant to which it is granted, an option may be exercised by giving to the
Company notice in writing (in such form as may from time to time be specified
by the Committee) stating the number of Common Shares subject to the option in
respect of which it is being exercised, accompanied by a check or cash in full
payment of all Common Shares in respect of which the option is being
exercised. Each such notice of exercise of an option shall be delivered to the
Chief Financial Officer of the Company. The Company shall have a reasonable
time after receipt of any such notice in which to make delivery of share
certificates for the Common Shares in respect of which an option is exercised.
Notwithstanding the foregoing, no option shall be exercisable during the first
six (6) months after the date such option is granted except in the case of
death or disability.
-18-
<PAGE>
Article Nine
Termination of Service
In case a Participant shall cease to be a Key Executive for any
reason, within ninety (90) days next succeeding such termination, but not
later than ten (10) years from the date of grant of the option, the
Participant (or the executor or administrator of his estate) may exercise such
vested option rights as he has under this Plan as of the date of such
termination. Options not exercised within the period set forth in the
preceding sentence shall thereupon expire and shall not be exercisable
thereafter.
Article Ten
Non-Transferability of Option
No option granted under this Plan shall be transferable
otherwise than by will or the laws of descent and distribution and an option
may not be exercised during the lifetime of a Participant except by him or by
his guardian or legal representative.
Article Eleven
Adjustments
In the event of any change in the outstanding Common Shares by
stock dividend, stock split-up, stock combination, reclassification,
recapitalization, merger, reorganization or other change in the Common Shares,
the Committee, upon the advice of accountants and counsel for the Company,
shall determine appropriate adjustments, if any, to be made in the number of
Common Shares and the prices per share in respect of Common Shares subject to
outstanding options and the number of Common Shares then reserved for options
which may thereafter be granted.
-19-
<PAGE>
Article Twelve
Amendment and Termination of the Plan
The Company, by action of the Board of Directors or the
Committee, reserves the right to amend, modify or terminate this Plan at any
time without shareholder approval.
Article Thirteen
Restrictions and Compliance
With Securities Laws
Anything contained in the Plan or elsewhere to the contrary
notwithstanding:
(1) No option granted under the Plan shall be exercisable for the
purchase of any Common Shares subject thereto except for:
(A) Common Shares subject thereto which at the time of such
exercise and purchase are registered under the Securities
Act, or which, upon the completion of such exercise, would
be issued in a transaction exempt from registration under
the Securities Act; and
(B) Common Shares subject thereto which at the time of such
exercise and purchase are exempt or are the subject matter
of an exempt transaction, are registered by description,
by coordination, or by qualification, or at such time are
the subject matter of a transaction which has been
registered by description, all in accordance with Chapter
1707 of the Ohio Revised Code, as amended; and
(C) Common Shares subject thereto in respect of which the laws
of any state applicable to such exercise and purchase have
been satisfied.
(2) If Common Shares subject to an option are sold and transferred
upon the exercise thereof to a person who (at the time of such
exercise or thereafter) controls, is controlled by or
-20-
<PAGE>
is under common control with the Company, or are sold and transferred in
reliance upon an exemption claimed in respect of the Securities Act, then upon
such sale and transfer;
(A) such Common Shares shall not be transferable by the holder
thereof, and neither the Company nor its transfer agent or
registrar, if any, shall be required to register or
otherwise to give effect to any transfer thereof and may
prevent any such transfer, unless the Company shall have
received an opinion from its counsel to the effect that
any such transfer would not violate the Securities Act or
the applicable laws of any state; and
(B) the Company shall cause each share certificate evidencing
such Common Shares to bear a legend reflecting applicable
restrictions on the transfer thereof and may use the
following or any other appropriate legend for that
purpose:
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS,
ARE RESTRICTED SECURITIES WITHIN THE MEANING OF RULE 144 PROMULGATED
UNDER THE ACT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE ENCUMBERED OR DISTRIBUTED EXCEPT PURSUANT TO (1) AN
EFFECTIVE REGISTRATION STATEMENT REGISTERING THE SHARES UNDER THE ACT
OR ANY APPLICABLE STATE SECURITIES LAWS OR (2) UNTIL THE COMPANY HAS
RECEIVED AN OPINION FROM ITS COUNSEL TO THE EFFECT THAT SUCH TRANSFER
DOES NOT VIOLATE THE ACT OR THE APPLICABLE SECURITIES LAWS OF ANY
STATE.
(3) Nothing contained in the Plan or elsewhere shall be construed
to require the Company to take any action whatsoever to make
exercisable any option granted under the Plan or to make
transferable any Common Shares issued upon the exercise of any
such option.
-21-
<PAGE>
Article Fourteen
Tax Withholding
Any person exercising an option shall be required to pay to the
Company the amount of any taxes the Company is required by law to withhold
with respect to the exercise of such option. Such payment shall be due on the
date the Company is required by law to withhold such taxes. In the event that
such payment is not made when due, the Company shall have the right to deduct,
to the extent permitted by law, from any payment of any kind (but only as
permitted by Rule 16b-3 of the Exchange Act for persons subject to Section 16
of the Exchange Act) otherwise due to such person from the Company all or part
of the amount required to be withheld.
-22-
Exhibit 10(b)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, is made to be effective as of July 5, 1995, between Symix
Systems, Inc., an Ohio corporation (the "Company") and Stephen A. Sasser
("Employee").
In consideration of the promises of the parties and of the mutual
advantages and benefits expected to be derived hereunder, the Company and
Employee, each intending to be legally bound, hereby agree as follows:
1. Employment. The Company hereby employs Employee and Employee hereby
accepts such employment upon the terms and conditions hereinafter
set forth.
2. Term. The Term of this Agreement shall be for a period of four (4)
years commencing on the effective date hereof (the "Original Term"),
unless sooner terminated pursuant to paragraph 10 hereof.
Thereafter, unless sooner terminated pursuant to paragraph 10
hereof, the Term of this Agreement automatically shall be extended
for additional, consecutive one-year Terms (each, an "Extended
Term") unless, in accordance with paragraph 14 of this Agreement,
(i) at least one hundred and fifty (150) days prior to the
expiration of the Original Term or any Extended Term, the Company
gives notice to Employee that the Company does not wish to extend
the Term of this Agreement, or (ii) at least one hundred and twenty
(120) days prior to the expiration of the Original Term or any
Extended Term, Employee gives notice to the Company that Employee
does not wish to extend the Term of this Agreement. The Original
Term, together with any Extended Terms, is hereinafter sometimes
referred to as the "Term."
3. Compensation and Other Benefits. Employee's compensation and other
benefits during the Term shall be as follows:
(a) Base Salary. Employee shall receive an annual base salary of
not less than $220,000 (the "Base Salary") to be paid
semi-monthly in equal installments. The Base Salary shall be
reviewed not less frequently than annually and shall be subject
to such upward adjustments as the Compensation Committee (the
"Compensation Committee") of the Board of Directors of the
Company (the "Board") may deem appropriate in its discretion.
(b) Incentive Compensation. During the Term of this Agreement,
Employee shall be entitled to additional compensation pursuant
to a bonus plan to be approved by the Compensation Committee
and to be consistent with this paragraph 3(b). Employee's
annual target bonus will be $180,000, of which 80% ($144,000)
will be earned if and to the extent the Company's earnings per
share achieve targets proposed annually by Employee and
approved by the Compensation Committee and 20% ($36,000) will
be earned if and to the extent the Company achieves other
strategic objectives proposed annually by Employee and approved
by the Compensation Committee.
-23-
<PAGE>
(c) Benefits. During the Term:
(i) If and so long as the Company can purchase insurance on
Employee's life at standard rates for his age, the
Company, at its expense, shall provide and maintain for
Employee a policy of insurance on Employee's life in an
amount equal to $1,000,000, the proceeds of which policy
shall be payable to one or more beneficiaries designated
by Employee or, if Employee fails to so designate a
beneficiary, to his estate;
(ii) The Company, at its expense, shall provide and maintain
for Employee a policy of long-term disability insurance
providing for an annual benefit to him of not less than
$250,000;
(iii)Employee shall be entitled to receive such perquisites,
fringe benefits and reimbursement of expenses historically
provided by the Company to its executive officers;
(iv) Employee shall be entitled to participate in any qualified
employee benefit plans provided by the Company at the
effective date of this Agreement (including, without
limitation, the Company's 401(k) Profit Sharing Plan) or
established by the Company, its successors or assigns at
any time during the Term, subject to eligibility and
enrollment requirements of such plans;
(v) The Company shall pay all medical costs and expenses
incurred by Employee in connection with growth hormone therapy
for his son; and
(vi) Employee shall be entitled to receive all other
employees benefits [including, without limitation, medical,
dental, group life (to the extent the coverage is superior to
that provided for in paragraph 3(c)(i) above), long-term
disability and accidental death insurance benefits] as are or
in the future may be provided by the Company to its executive
officers.
4. Duties. Employee is engaged as the President and Chief Operating
Officer of the Company and hereby promises to perform and discharge
well and faithfully these and such other duties which may be
assigned to him from time to time by the Board of Directors of the
Company. Employee shall serve as a director of the Company and as an
officer or director (or both) of any of its subsidiaries and
affiliates if elected as such.
5. Extent of Services. Employee shall devote his entire working time,
attention and energies to the business of the Company and shall not,
during the Term of this Agreement, be engaged in any other business
activity, whether or not such business activity is pursued for gain,
profit or other pecuniary advantage; but this Agreement shall not be
construed as preventing Employee from investing his personal assets
in businesses which do not compete or do business with the Company
in such form or manner as will not require any services on the part
of the Employee in the operation of the affairs of the businesses in
which such investments are made and
-24-
<PAGE>
in which his participation is solely that of an investor. Not-
withstanding any provision of this Agreement to the contrary,
Employee may: (a) purchase securities in any corporation or other
business entity so long as such purchases do not result in Employee
owning beneficially at any time 10% or more of the equity securities
of any corporation or ownership interests of any other business
entity doing business with the Company or engaged in any business
from which the Company derives a Majority of the Company's Business;
and (b) serve on the board of directors or comparable governing body
of any corporation or other business entity which neither does
business with the Company nor engages in any business from which the
Company derives a Majority of the Company's Business. For purposes
of this paragraph 5, a "Majority of the Company's Business" means
any business from which the Company derives a majority of its
business measured as a percentage of annual gross revenues in the
Company's tax year during which the term of this Agreement began.
6. Covenant Not to Compete or Solicit.
(a) Non-Competition. Employee agrees that, without the prior
written consent of the Company, during the Term of this
Agreement and for a period of one (1) year dating from the date
Employee ceases to be employed by the Company, whether
Employee's termination was voluntary or involuntary, he will
not, directly or indirectly, as a sole proprietor, member of a
partnership or limited liability company, officer or director
of a corporation, stockholder or investor (other than holding
not more than ten percent (10%) of the voting equity securities
of a corporation or ownership interests of any other business
entity), or as an employee, agent, associate or consultant of
any person, firm or corporation,
(i) engage in the operation of any enterprise which manufactures,
sells or distributes any software products, or offers any
service, in the United States that is competitive with a
Majority of the Company's Business, or
(ii) solicit business which is substantially the same as a Majority
of the Company's Business from any customer of the Company or
from any former customer of the Company who was such within two
(2) years prior to such solicitation or from any potential
customer or prospect listed in the Company's books and records
as such and who has been actively solicited by the Company
within six (6) months prior to the date that Employee ceases to
be employed by the Company.
Nothing contained in this paragraph 6(a) shall prohibit
Employee from engaging in activities as permitted under paragraph 5
above or, during the one (1) year period dating from the date
Employee ceases to be employed by the Company, from being employed
by any person or entity which does not, directly or indirectly,
engage in any business in the United States that is competitive with
any manufacturing-based software product or related service sold,
distributed or offered by the Company in the United States.
(b) Non-Solicitation of Employees. Employee further agrees that he
will not, for a period of one (1) year dating from the date
Employee ceases to be employed by the
-25-
<PAGE>
Company, solicit any employee of the Company to terminate
the employee's employment with the Company under any
circumstances.
(c) Severability. It is the desire and intent of the parties that
the provisions of this paragraph 6 shall be enforced to the
fullest extent permissible under the laws and public policies
applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular portion of this paragraph 6
shall be adjudicated to be invalid or unenforceable, this
paragraph 6 shall be deemed amended to delete therefrom the
portion adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of this
paragraph in the particular jurisdiction in which such
adjudication is made.
7. Confidential Information. Employee recognizes and acknowledges that
the Company's trade secrets and confidential or proprietary
information, including but not limited to information of the Company
concerning operations, customers or prospects, terms and conditions
of sale and prices, technical knowledge relating to customer
requirements, and knowledge of markets for the Company's products,
as such trade secrets or information may exist from time to time,
are valuable, special and unique assets of the Company's business,
access to and knowledge of which are essential to the performance of
the duties of Employee. Employee will not, during or at any time
after Employee's employment with the Company, in whole or in part,
disclose such secrets or confidential or proprietary information to
any person, firm, corporation, association or other entity (except
the Company) under any circumstances.
8. Ownership of Inventions, Patents or Innovations. Employee agrees to
communicate to the Company, promptly and fully, and to assign to the
Company all inventions and technical or business innovations,
including, but not limited to, any computer products developed or
conceived solely by Employee, or jointly with others, during the
Term hereof, which are within the scope of the Company's business as
conducted on the effective date of this Agreement or at any time
during the Term hereof, or which were developed on Company time, or
which utilized Company equipment, materials or information. Employee
further agrees to execute all necessary papers, and otherwise to
assist the Company, at the Company's sole expense, to obtain patents
or other legal protection as the Company deems fit, both during and
after Employee's Term of employment with the Company. Any such
inventions and technical or business innovations, and any such
computer products, are to be the property of the Company, and
Employee shall have no proprietary interest therein.. All original
works of authorship written or authored solely by Employee, or
jointly with others, during the Term of Employee's employment, which
are within the scope of the Company's business, or which were
written on Company time, shall be works made for hire as defined in
Section 101 of Title 17, United States Code, and the copyright
therein shall vest in the Company.
9. Injunctive Relief. If there is a breach or threatened breach of the
provisions of Paragraphs 6 or 7 or 8 of this Agreement, the Company
shall be entitled to an injunction restraining Employee from such
breach. Nothing herein contained shall be construed as prohibiting
the Company from pursuing any other remedies for such breach or
threatened breach.
-26
<PAGE>
10. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon Employee's death. The Company may terminate
this Agreement, after having established Employee's Disability
(pursuant to the definition of "Disability" set forth in the
disability insurance policy referred to in paragraph 3(c)(ii)
hereof), by giving to Employee written notice of its intention
to terminate Employee's employment hereunder. In such a case,
Employee's employment hereunder shall terminate effective on
the date on which he becomes entitled to benefits under the
above-referenced disability insurance policy (which date shall
be the Date of Termination pursuant to paragraph 10(e) hereof).
(b) Cause. The Company may terminate Employee's employment under
this Agreement for "Cause." For purposes of this Agreement,
"Cause" means:
(i) Failure of Employee to perform his obligations under
paragraph 4 of this Agreement, which failure is
demonstrably willful and deliberate on Employee's part
after (A) a demand for performance is delivered in writing
to Employee by the Chief Executive Officer of the Company
which specifically identifies the manner in which the
Chief Executive Officer believes that Employee has so
failed, and (B) a reasonable period during which Employee
may cure such failure; or
(ii) Conviction of a felony involving a crime against the
Company and material injury to the property or business of
the Company.
Provided that, prior to the termination of Employee's
employment under this sub-paragraph (b), the Company's Board of
Directors shall give Employee notice of the Company's intention to
terminate Employee's employment, which notice shall include a
statement of the grounds for such termination and the specific
provision of this Agreement providing such grounds, and Employee
shall have an opportunity to be heard by the Company's Board of
Directors at a special meeting thereof to be held within 10 days
after notice is given as required hereunder.
(c) Termination by Employee After a Change in Control. Employee's
employment under this Agreement may be terminated by Employee
at any time within a year after a Change in Control upon
fifteen (15) days prior written notice from Employee to the
Company. For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred:
(i) If any person other than Lawrence J. Fox, including a
"group" as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") (but
excluding Employee or any group of which Employee is a
member), becomes the beneficial owner, directly or
indirectly, of 33% or more of the combined voting power of
the Company's
-27-
<PAGE>
outstanding voting securities ordinarily having the
right to vote for the election of directors of the
Company;
(ii) If individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Board" generally
and as of the date hereof the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election
by the Company's shareholders, was approved by a vote of
at least three-quarters of the directors comprising the
Incumbent Board (other than election or nomination of an
individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the Company,
as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes
of this Agreement, considered as though such person were a
member of the Incumbent Board;
(iii)Upon the occurrence of a transaction which requires
shareholder approval and results in the acquisition of the
Company by an entity other than a subsidiary of the
Company through purchase of assets, by merger, or
otherwise; or
(iv) Upon the removal of Employee from, or the failure of the
Company's shareholders to re-elect Employee to, the Board
against his will (which is evidenced by written notice
from Employee to the Board within thirty (30) days after
such removal or failure to re-elect) other than as a
result of Employee's death, disability, or termination for
Cause.
Notwithstanding the foregoing, Employee agrees that, upon the
written request of the Company delivered to Employee within five (5)
business days after a Change in Control, Employee agrees to continue
to be employed by the Company under the terms of this Agreement for
a period of at least one hundred and eighty (180) days after such
Change in Control, but thereafter may exercise his rights under
Paragraph 10 (c) above.
(d) Notice of Termination. Any termination by the Company for Cause
or by Employee at any time after a Change in Control shall be
communicated by Notice of Termination to the other party hereto
given in accordance with paragraph 14 of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of Employee's employment under
the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such
notice, specifies the termination date.
-28-
<PAGE>
(e) Date of Termination. The term "Date of Termination," as used in
this Agreement, means, as applicable: (i) the date of
Employee's death or the date on which he becomes entitled to
disability insurance benefits, (ii) the date of receipt of a
Notice of Termination or any later date specified therein
(which date shall be not more than 15 days after the giving of
such notice) or (iii) at the end of the Original Term or any
Extended Term if either the Company or Employee has given
notice in accordance with paragraph 2 hereof. If Employee's
employment is terminated by the Company other than for Cause or
Disability, the Date of Termination shall be the date on which
the Company notifies Employee of such termination. If
Employee's employment is terminated by Employee after a Change
in Control, the Date of Termination shall be the fifteenth
(15th) day after Employee notifies the Company of such
termination. If Employee's employment is terminated by Employee
other than after a Change in Control, the Date of Termination
shall be the date on which Employee notifies the Company of
such termination.
(f) Compensation Upon Death or Disability, Termination for Cause,
or Resignation More Than One Year After a Change in Control. If
Employee's employment is terminated during the Original Term or
any Extended Term, by reason of his death or Disability, by the
Company for Cause, or by Employee more than one (1) year after
a Change in Control, or if the Term of this Agreement is not
extended at the end of the Original Term or any Extended Term,
then the Company shall pay to Employee (i) his Base Salary
through the Date of Termination at the rate then in effect, and
(ii) bonus compensation as provided under paragraph 3(b) above
on a pro rata basis to the extent that the Company has achieved
its annual targets and objectives as referenced thereunder as
of the Date of Termination, and the Company shall have no
further obligation to Employee under this Agreement; provided,
that the Company shall not be relieved of its obligation to
make any payments to which Employee (or, if applicable, his
spouse, beneficiaries or estate) is entitled under any pension,
deferred compensation or employee benefit plan or plans of the
Company or under any other agreement (which payments shall be
made in accordance with the terms of any such plan or
agreement).
(g) Compensation Upon Termination Without Cause or Termination
Within One Year After a Change in Control. If, during the
Original Term or any Extended Term of this Agreement, the
Company shall terminate Employee's employment other than for
Cause or Disability, or if Employee shall terminate his
employment with the Company within one (1) year after a Change
in Control, then:
(i) In addition to any and all amounts due and payable by the
Company to Employee through the Date of Termination
pursuant to paragraph 3 (a) of this Agreement, the Company
shall immediately pay to Employee in a lump sum in cash
the aggregate of the following amounts:
(A) if the Date of Termination is on or prior to the
first anniversary of the effective date of this
Agreement, an amount equal to two times the
Employee's annual Base Salary as of the Date of
Termination; or, if the Date of Termination is
subsequent to the first anniversary of the
-29-
<PAGE>
effective date of this Agreement, an amount equal to
the Employee's annual Base Salary as of the Date
of Termination; and
(B) an amount equal to the highest bonus earned by
Employee pursuant to paragraph 3(b) hereof with
respect to any fiscal year of the Company ending
prior to the Date of Termination; and
(C) In the event any payments to Employee under this
paragraph 10(g) are determined to be subject to the
tax (the "Excise Tax") imposed by ss.4999 of the
Internal Revenue Code of 1986, as amended (the
"Code"), or any similar federal or state excise tax,
an amount (the "Gross-Up Payment") necessary for the
net amount retained by Employee after payment of any
Excise Tax imposed as a result of payments and
benefits provided under this paragraph 10(g),
including the Gross-Up Payment itself, to be equal to
the sum of the amounts provided in paragraphs
10(g)(i)(A) and (B), above. For purposes of
determining whether any of the payments and benefits
provided under this paragraph 10(g) will be subject
to the Excise Tax and the amount of such Excise Tax:
(1) Any other payments or benefits received or to be
received by Employee in connection with a Change in
Control or the termination of employment (whether
pursuant to the terms of this Agreement or of any
other plan, arrangement or agreement with the
Company) shall be treated as "parachute payments"
within the meaning of ss.280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of
ss.280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel
selected by the Company's independent auditors and
acceptable to Employee, other payments or benefits
(in whole or in part) do not constitute parachute
payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for
services actually rendered within the meaning of
ss.280G(b)(4) of the Code;
(2) The amount of the payments and benefits which shall
be treated as subject to the Excise Tax shall be
equal to the lesser of (i) the total amount of the
payments and benefits provided under this paragraph
10(g) or (ii) the amount of excess parachute payments
within the meaning of ss.ss.280G(b)(1) and (4) after
applying paragraph 10(g)(i)(C)(1), above); and
(3) The value of any noncash benefits or any deferred
payment or benefit shall be determined by the
Company's independent auditors in accordance with the
principles of ss.ss.280G(d)(3) and (4) of the Code.
-30-
<PAGE>
If the Excise Tax is subsequently determined to
be less than the amount taken into account hereunder at
the time of termination of employment, Employee shall
repay to the Company, at the time the reduction in the
Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction. If the
Excise Tax is determined to exceed the amount taken into
account hereunder at the time of termination of
employment, the Company shall make an additional
Gross-Up Payment to Employee in respect of such excess
at the time such excess is finally determined.
(ii) The Company shall, promptly upon submission by
Employee of supporting documentation, pay or
reimburse to Employee all costs and expenses paid or
incurred by Employee prior to the Date of Termination
which would have been payable under paragraph 3(c) if
Employee's employment had not terminated;
(iii)For a period ending on the second anniversary of the
Date of Termination, or on such earlier date as
Employee shall become employed elsewhere, Employee
shall continue to be treated as a key employee for
purposes of the plans, programs and policies of the
Company described in paragraph 3(c)(i), (ii), (v),
and the Company shall continue to provide benefits
and to accrue service credits to or for the benefit
of Employee and/or Employee's family at least equal
to those which would have been provided or accrued,
as the case may be, in accordance with the plans,
programs and policies referred to in paragraph
3(c)(i), (ii), (v), and (vi), if Employee's
employment had not been terminated; and
(iv) If, despite the provisions of paragraph 10(g)(iii)
above, benefits or service credits shall not be
available under any of the plans, programs, or
policies of the Company because Employee is no longer
an employee of the Company, the Company itself shall,
to the extent necessary, pay or provide for payment
of benefits to Employee and/or Employee's family, or,
where applicable, pay or provide to Employee and/or
Employee's family the difference between the benefits
payable pursuant to paragraph 10(g)(iii) above and
the benefits payable pursuant to the terms of such
plans, programs, and policies, in each case at the
time such payments would be payable pursuant to the
terms of such plans, programs and policies and taking
into account, where appropriate, the service credits
deemed accrued pursuant to paragraph 10(g)(iii).
11. Enforcement Costs. The Company is aware that, upon the occurrence of
a Change in Control, the Board or a shareholder of the Company, or
the Company's successor in interest, may then cause or attempt to
cause the Company to institute, or may institute, litigation seeking
to have this Agreement declared unenforceable, or may take, or
attempt to take, other court action to deny Employee the benefits
intended under this Agreement.
If following a Change in Control the Company, the Board, a shareholder of
the Company or the Company's successor in interest institutes any litigation
or other court action designed to
-31-
<PAGE>
deny, diminish or recover from Employee the benefits intended to be provided
to Employee hereunder, and Employee retains counsel to represent Employee in
connection with the defense of any such litigation or other court action, in
the event that Employee prevails on the merits in any such litigation or court
action, the Company shall pay or reimburse Employee for the reasonable fees
and expenses of counsel retained by Employee to defend Employee in any such
litigation or court action. Such payment or reimbursement shall be made by the
Company in advance of the final disposition of such litigation or court action
on a regular, periodic basis upon presentation by Employee of a statement or
statements prepared by Employee's counsel in accordance with its customary
practices, provided that Employee first agrees, in writing, to repay to the
Company all amounts so paid or reimbursed in respect of any claim, issue or
other matter asserted in such action, suit or proceeding in defense of which
he shall not have been successful on the merits.
12. Stock Options.
(a) As separate consideration for entering into this Employment
Agreement, and especially as consideration for Employee's obligations under
paragraphs 6, 7, 8, 9 and 16 hereof, the Company agrees to grant to Employee
an option (the "Option") to purchase up to 200,000 of the Company's common
shares pursuant to a new non-qualified stock option plan to be adopted by the
Board of Directors of the Company (the "New Plan"). The Option will be granted
within fourteen (14) days after execution of this Agreement or approval of the
New Plan by the Company's Board of Directors, whichever occurs later. The
price per share at which Employee will be entitled to purchase the Company's
common shares under the Option shall be $7.625 (seven and five-eighths
dollars) per share. The Option will become exercisable in four (4) equal
installments on each of the first through the fourth anniversaries of July 5,
1995 (July 5, 1996, 1997, 1998, and 1999) and, notwithstanding such vesting
schedule, will become immediately vested in full and exercisable in the event
that Employee's employment is terminated by the Company other than for Cause
or by Employee within one year after a Change in Control, except that the
Option shall not be exercisable during the first six (6) months after the date
it is granted. Following termination of Employee's employment for any reason
except by the Company for Cause, the Option will remain exercisable according
to its terms (subject to accelerated vesting of the Option as described in the
preceding sentence) for a period of 90 days following such termination or, if
sooner, until the expiration of the original term of the Option. The Option
will have such other terms and be subject to such other conditions, not
inconsistent with the terms and conditions of this Agreement, as the Committee
administering the New Plan shall determine.
(b) If the Company achieves a ten percent (10%) pre-tax profit margin
for its 1996 fiscal year, the Company agrees to grant to Employee an
additional option (the "Additional Option") to purchase up to seventy thousand
(70,000) of the Company's common shares pursuant to the Symix Systems, Inc.
Non-Qualified Stock Option Plan for Key Employees (the "Plan") at one hundred
percent (100%) of the Fair Market Value of the shares on the date on which the
Additional Option is granted (which date will be not later than thirty (30)
days after the date of publication of quarterly and annual summary statements
of sales and earnings for the fiscal 1996 fourth quarter and year); provided
Employee remains employed by the Company hereunder through the end of the
Company's 1996 fiscal year. The Additional Option will become exercisable in
four (4) equal installments on each of the first through the fourth
anniversaries of
-32-
<PAGE>
the grant date for the Additional Option and, notwithstanding such vesting
schedule, will become immediately vested in full and exercisable in the event
that Employee's employment is terminated by the Company other than for Cause
or by Employee within one year after a Change in Control. Following
termination of Employee's employment for any reason except by the Company for
Cause, the Additional Option will remain exercisable according to its terms
(subject to accelerated vesting of the Additional Option as described in the
preceding sentence) for a period of 90 days following such termination or, if
sooner, until the expiration of the original term of the Option. The
Additional Option will have such other terms and be subject to such other
conditions, not inconsistent with the terms and conditions of this Agreement,
as the Committee administering the Plan shall determine.
(c) Employee hereby expressly agrees that Employee's receipt of the
Option, whether or not any Additional Option is ever granted, is sufficient
consideration to require him to be bound by the provisions of paragraphs 6, 7,
8, 9 and 16 hereof. Employee also recognizes and acknowledges that his
execution of this Agreement was a condition precedent to the Company's
agreement to grant the Option and Additional Option to him; that is, the
Company would not have agreed to grant the Option and Additional Option to
Employee but for the execution of this Agreement. Employee recognizes,
acknowledges and agrees that nothing contained in this paragraph 12, including
but not limited to the Company's agreement to grant the Additional Option,
shall be construed or interpreted to extend the Term of this Agreement beyond
that provided by paragraphs 2 and 10 hereof.
13. Litigation Assistance. Employee covenants and agrees that he
shall, upon reasonable notice, during the Term of his employment with the
Company under this Agreement and for three full years after the expiration or
termination thereof, furnish such information and proper assistance to the
Company as may be reasonably required by the Company in connection with any
litigation in which it is, or may become, a party unless the furnishing of
such information or assistance will unreasonably interfere with Employee's
employment with a third party or other business activities. The Company shall
reimburse the Employee for all reasonable out-of-pocket expense incurred by
him in furnishing such information and assistance.
14. Notices. Any notice or other communication required or desired to
be given to any party under this Agreement shall be in writing and shall be
deemed given when either delivered personally to that party or deposited in
the United States mail, first-class postage prepaid, addressed to that party
at, or delivered to, the address specified below:
(a) If to the Company:
Symix Systems, Inc.
2800 Corporate Exchange Drive
Columbus, Ohio 43231
Attention: Lawrence J. Fox, Chairman
With a copy to:
-33-
<PAGE>
Vorys, Sater, Seymour and Pease
52 East Gay Street
Columbus, Ohio 43215
Attention: Ivery D. Foreman, Esq.
(b) If to Employee:
Stephen A. Sasser
2407 Tremont
Upper Arlington, Ohio 43221
With a copy to:
Baker & Hostetler
65 East State Street
Suite 2100
Columbus, Ohio 43215
Attention: Ronald G. Linville, Esq.
15. Nonwaiver of Breach. No failure by any party to insist upon strict
compliance with any term of this agreement, to exercise any option, to enforce
any right, or to seek any remedy upon any default of any other party shall
affect, or constitute a waiver of, the first party's right to insist upon such
strict compliance, exercise that option, enforce that right, or seek that
remedy with respect to that default or any prior, contemporaneous, or
subsequent default; nor shall any custom or practice of the parties at
variance with any provision of this agreement affect, or constitute a waiver
of, any party's right to demand strict compliance with all provisions of this
agreement.
16. Ohio Law to Govern. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Ohio. Any
action, suit or proceeding in respect of or arising out of this Agreement or
the transactions contemplated hereby shall be prosecuted as to any one or more
of the parties hereto at Columbus, Ohio. EACH PARTY HERETO JOINTLY AND
SEVERALLY CONSENTS AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER HIS OR ITS
PERSON BY ANY COURT SITUATED AT COLUMBUS, OHIO AND HAVING JURISDICTION OVER
THE SUBJECT MATTER OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN
RESPECT OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
17. Assignment. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the
successors of the Company and of Employee's personal representatives or, in
the case of Employee's death, his heirs, and may be assigned, for all or any
part of the Term hereof, by the Company to any corporation (a) which at the
time controls the capital stock of the Company, (b) which succeeds to
substantially all of the assets of the Company, or (c) the controlling voting
shares of which are at the time owned by the
-34-
<PAGE>
Company. In the event of such assignment, any and all references to the
"Company" in other paragraphs of this Agreement shall be deemed to mean and
include such assignee corporation. The Employee may not assign this Agreement,
or any part hereof, to any other person without the prior written consent of
the Company.
18. Entire Agreement. This instrument contains the entire agreement of
the parties relating to Employee's employment by the Company and it supersedes
all prior agreements or understandings, written or oral, with respect to such
subject. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
19. Severability. The intention of the parties to this Agreement is to
comply fully with all laws and public policies, and this Agreement shall be
construed consistently with all laws and public policies to the extent
possible. If and to the extent that any court of competent jurisdiction
determines that it is impossible or violative of any legal prohibition to
construe any provision of this Agreement consistently with any law, legal
prohibition, or public policy and consequently holds that provision to be
invalid or prohibited, such holding shall in no way affect the validity of the
other provisions of this Agreement, which shall remain in full force and
effect.
20. Captions. The captions of the various sections of this Agreement
are not part of the context of this Agreement, but are only labels to assist
in locating those sections, and shall be ignored in construing this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day first hereinabove written.
SYMIX SYSTEMS, INC.
By _____________________________________
Lawrence J. Fox
Chairman and Chief Executive Officer
Date: ______________________________
EMPLOYEE
_____________________________________
Stephen A. Sasser
Date: ______________________________
-35-
Exhibit 10(c)
SYMIX SYSTEMS, INC.
STOCK OPTION AGREEMENT
This Agreement, made and entered into as of January 17, 1996,
by and between Symix Systems, Inc., an Ohio corporation (sometimes hereinafter
called the "Company") and Stephen A. Sasser (sometimes hereinafter called the
"Optionee"),
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company has adopted the
Symix Systems, Inc. Non-Qualified Stock Option Plan for Key Executives
(sometimes hereinafter called the "Plan") and, pursuant to the Plan, has
appointed a Committee (sometimes hereinafter called the "Committee") to
administer the Plan; and
WHEREAS, the Committee has determined that an option to acquire
Common Shares under the Plan should be granted to the Optionee upon the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto make the following agreement,
intending to be legally bound hereby;
(1) Grant of Option. The Company hereby grants to the Optionee an option
(sometimes hereinafter called the "Option") to purchase two hundred thousand
(200,000) Common Shares of the Company.
(2) Option Price. The purchase price (sometimes hereinafter called the
"Option Price") to be paid by the Optionee to the Company upon the exercise of
the Option shall be Seven and 62.5/100 Dollars ($7.625) per share.
-36-
<PAGE>
(3) Option Term.
(a) The Optionee may exercise the Option, from time to time and at any
time, in accordance with the following vesting schedule and during the period
commencing on the date first above written and expiring at midnight on the
tenth (10th) anniversary of the date first above written (said period of time
sometimes hereinafter called the "Option Period"): Vesting Schedule
<TABLE>
25% vested 50% vested 75% vested 100% vested
as of 7/5/96 as of 7/5/97 as of 7/5/98 as of 7/5/99
------------ ------------ ------------ ------------
Total Number Number of Number of Number of Number of
of Shares Shares Shares Shares Shares
------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
200,000 50,000 100,000 150,000 200,000
</TABLE>
Notwithstanding the foregoing, and subject to Paragraphs 3(b) and 3(c)
hereof, the Option shall not vest with respect to any additional Common Shares
of the Company on or after the date on which the Optionee shall no longer be
an employee of the Company.
(b) Change in Control.
(i) Anything contained in this Agreement or elsewhere to the contrary
notwithstanding, in the event of a Change in Control (as defined below) of the
Company, the Option granted hereunder immediately shall become vested in full
and fully exercisable if Optionee's employment with the Company is terminated
by Employee within one year after the Change in Control whether or not then
exercisable.
(ii) For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred :
-37-
<PAGE>
(1) If any person other than Lawrence J. Fox, including a "group" as
such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934 (the "Exchange Act") (but excluding Optionee or any group of
which Optionee is a member), becomes the beneficial owner, directly
or indirectly, of 33% or more of the combined voting power of the
Company's outstanding voting securities ordinarily having the right
to vote for the election of directors of the Company;
(2) If individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Board" generally and as of the date
hereof the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote
of at least three-quarters of the directors comprising the Incumbent
Board (other than election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
Directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a
member of the Incumbent Board;
(iii)Upon the occurrence of a transaction which requires shareholder
approval and results in the acquisition of the Company by an
entity other than a subsidiary of the Company through purchase
of assets, by merger, or otherwise; or
-38-
<PAGE>
(iv) Upon the removal of Optionee from, or the failure of the
Company's shareholders to re-elect Optionee to, the Board
against his will (which is evidenced by written notice from
Optionee to the Board within thirty (30) days after such
removal or failure to re-elect) other than as a result of
Optionee's death, disability, or termination for "Cause" (as
defined herein). For purposes of this Agreement, "Cause" has
the same meaning as ascribed to it in the Employment Agreement
effective July 5, 1995 between the Company and Optionee (the
"Employment Agreement").
(c) Automatic Vesting of Option Upon Death or Disability, Termination of
Optionee's Employment By The Company Except For Cause.
(i) Anything contained in this Agreement or elsewhere to the
contrary notwithstanding, in the event Optionee dies or becomes
Disabled (based on the definition of "Disability referred to in
paragraph 3(c)(ii) below) or Optionee's employment with the
Company is terminated by the Company other than for Cause, the
Option granted hereunder immediately shall become vested in
full and fully exercisable as of the date of Optionee's death
or Disability or such termination, whether or not then
exercisable.
(ii) For purposes of this Agreement, "Disability" shall have the
same meaning ascribed to it in the Employment Agreement.
(4) Exercise of Option: Payment. The Option may be exercised prior to its
expiration only by:
(a) The Optionee; or
-39-
<PAGE>
(b) If a fiduciary is appointed by a court to administer the estate of
the Optionee during his lifetime by reason of the physical or mental
disability of the Optionee, by such court-appointed fiduciary; or
(c) In case of the death of the Optionee prior to the expiration of the
Option, by the court-appointed fiduciary administering the estate of the
Optionee.
Any person entitled to exercise the Option may exercise the Option by
giving notice of such exercise to the Company stating the number of Common
Shares subject to the Option in respect of which it is being exercised,
accompanied by a check or cash in full payment of the total Option Price for
such Common Shares. Notwithstanding the foregoing, the Option shall not be
exercisable during the first six (6) months after the date that the Option is
granted except in the case of death or disability of the Optionee.
(5) Adjustment. In the event of any stock dividend, stock split up,
combination or other change (by amendment of the certificate of incorporation,
merger or otherwise) in respect of the Common Shares of the Company prior to
the expiration of the Option, the number of Common Shares thereafter subject
to the Option and/or the Option Price therefor shall be adjusted to be such
number and/or price to reflect appropriately each such change.
(6) Delivery of Share Certificates. In case the Option is exercised by
the Optionee from time to time or at any time, the Company shall, within five
(5) business days after receipt of such notice (or, if counsel to the Company
shall require any securities and/or blue sky laws compliance prior to such
issuance, as promptly thereafter as is reasonably practicable), take
-40-
<PAGE>
all such action as is necessary to request the transfer agent to have
delivered appropriate share certificates evidencing the Common Shares
purchased upon such exercise of the Option.
(7) Termination of Option. Anything contained in this Agreement or
elsewhere to the contrary notwithstanding, the Option (and all of the rights
of the Optionee under this Agreement) shall expire and terminate:
(a) Immediately upon the termination for Cause of the Optionee by the
Company;
(b) On the ninetieth (90th) calendar day next following the first date
when the Optionee shall no longer be an employee of the Company for reasons
other than a for Cause termination (but in no event after the expiration of
the Option Period); or
(c) On the ninetieth (90th) calendar day next following the date of death
of the Optionee (but in no event after the expiration of the Option Period).
(d) For purposes of this Agreement, "Cause" shall have the same meaning
as assigned to it under the Employment Agreement.
(8) Restrictions on Transfer of Shares. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding:
(a) The Option shall not be exercisable for the purchase of any Common
Shares subject thereto except for:
(i) Common Shares subject thereto which at the time of such exercise and
purchase are registered under the Securities Act of 1933, as amended
(the "Act") or which, upon the completion of such exercise, would be
issued in a transaction exempt from registration under the Act; and
-41-
<PAGE>
(ii) Common Shares subject thereto which at the time of such exercise and
purchase are exempt or are the subject matter of an exempt
transaction, are registered by description, by coordination, or by
qualification, or at such time are the subject matter of a
transaction which has been registered by description, all in
accordance with Chapter 1707 of the Ohio Revised Code, as amended;
and
(iii)Common Shares subject thereto in respect of which the laws of any
state applicable to such exercise and purchase have been satisfied.
(b) If any Common Shares subject to the Option are sold and transferred
upon the exercise thereof to a person who (at the time of such exercise and
transfer or at any time thereafter) controls, is controlled by or is under
common control with the Company, or are sold and transferred in reliance upon
an exemption claimed in respect of the Act, then upon such sale and transfer:
(i) Such Common Shares shall not be transferable by the holder thereof,
and neither the Company nor its transfer agent or registrar, if any,
shall be required to register or otherwise to give effect to any
transfer thereof and may prevent any such transfer, unless the
Company shall have received an opinion from its counsel to the
effect that any such transfer would not violate the Act or the
applicable laws of any state; and
(ii) The Company shall cause each share certificate evidencing such
Common Shares to bear a legend reflecting applicable restrictions on
the transfer thereof.
(c) Nothing contained in this Agreement or elsewhere shall be construed
to require the Company to take any action whatsoever to eliminate the
restrictions imposed by this
-42-
<PAGE>
paragraph (8) of this Agreement upon the exercise of the Option or upon the
transfer of Common Shares purchased upon the exercise of the Option.
(9) Notices and Payments. All payments required or permitted to be made
under the provisions of this Agreement, and all notices and other
communications required or permitted to be given or delivered under this
Agreement to the Company or to the Optionee, which notices or communications
must be in writing, shall be deemed to have been given if delivered by hand,
or mailed by first-class mail (postage prepaid), addressed as follows:
(a) If to the Company, to:
Symix Systems, Inc.
ATTN: Chief Financial Officer
2800 Corporate Exchange Drive
Columbus, OH 43231
(b) If to the Optionee, to the address
of the Optionee set forth at the
conclusion of this Agreement.
The Company or the Optionee may, by notice given to the other in accordance
with this Agreement, designate a different address for making payments
required or permitted to be made, and for the giving of notices or other
communications, to the party designating such new address. Any payment, notice
or other communication required or permitted to be given in accordance with
this Agreement shall be deemed to have been given when placed in the U.S.
Mail, addressed and mailed as provided in this Agreement.
(10) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
(11) Rights and Remedies Cumulative. All rights and remedies of the
Company and of the Optionee enumerated in this Agreement shall be cumulative
and, except as expressly
-43-
<PAGE>
provided otherwise in this Agreement, none shall exclude any other rights or
remedies allowed at law or in equity, and each of said rights or remedies may
be exercised and enforced concurrently.
(12) Duplicate Originals. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be a duplicate original, but
all of which, taken together, shall be deemed to constitute a single
instrument.
(13) Captions. The captions contained in this Agreement are included only
for convenience of reference and do not define, limit, explain or modify this
Agreement or its interpretation, construction or meaning and are in no way to
be construed as a part of this Agreement.
(14) Severability. If any provision of this Agreement or the application
of any provision thereof to any person or any circumstance shall be determined
to be invalid or unenforceable, then such determination shall not affect any
other provision of this Agreement or the application of said provision to any
other person or circumstance, all of which other provisions shall remain in
full force and effect, and it is the intention of each party to this Agreement
that if any provision of this Agreement is susceptible of two or more
constructions, one of which would render the provision enforceable and other
or others of which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
(15) Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may require.
-44-
<PAGE>
(16) Entire Agreement. This Agreement constitutes the entire Agreement
between the Company and the Optionee in respect of the subject matter of this
Agreement, and this Agreement supersedes all prior and contemporaneous
Agreements between any party hereto in connection with the subject matter of
this Agreement. No officer, employee or other servant or agent of the Company,
and no servant or agent of the Optionee, is authorized to make any
representation, warranty or other promise not contained in this Agreement. No
change, termination or attempted waiver of any of the provisions of this
Agreement shall be binding upon any party hereto unless contained in a writing
signed by the party to be charged.
(17) Non-Transferable: Successors and Assigns. The Option shall not be
transferable by the Optionee other than by will or by the laws of descent and
distribution and the Option may not be exercised during the lifetime of the
Optionee except by him or by his court-appointed fiduciary. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns
(including successive, as well as immediate, successors and assigns) of the
Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date first above written.
Company: Optionee:
SYMIX SYSTEMS, INC. STEPHEN A. SASSER.
By: ______________________________ _________________________________
Lawrence J. Fox Stephen A. Sasser
Its: Chief Executive Officer 2407 Tremont Road
Arlington, Ohio 43221
(614) 523-7190
Social Security Number:
-45-
Exhibit 11
Statement Re Computation of Per Share Earnings
SYMIX SYSTEMS, INC.
COMPUTATION OF PER SHARE EARNINGS
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
March 31, March 31,
1996 1995 1996 1995
---- ---- ---- ----
Primary:
Average Shares Outstanding .......... 2,739 2,696 2,731 2,748
Net effect of dilutive stock options
based on the treasury stock method 118 0 55 0
------ ------- ------ -------
Total .................... 2,857 2,696 2,786 2,748
====== ======= ====== =======
Net Income .......................... $ 645 $ 199) $1,560 ($ 794)
====== ======= ====== =======
Per Share Amount .................... $ 0.23 ($ 0.07) $ 0.56 ($ 0.29)
====== ======= ====== =======
Fully dilutive effect of stock options on per share amounts for the three
months and nine months ended March 31, 1996 and 1995, has not been presented
since any reduction of less than 3% in the aggregate need not be considered as
dilution.
-46-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Symix
Systems, Inc. Form 10-Q for the period ended March 31, 1996 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,393
<SECURITIES> 0
<RECEIVABLES> 10,402
<ALLOWANCES> 502
<INVENTORY> 446
<CURRENT-ASSETS> 17,606
<PP&E> 10,984
<DEPRECIATION> 6,109
<TOTAL-ASSETS> 28,394
<CURRENT-LIABILITIES> 10,569
<BONDS> 0
0
0
<COMMON> 29
<OTHER-SE> 16,327
<TOTAL-LIABILITY-AND-EQUITY> 28,394
<SALES> 17,177
<TOTAL-REVENUES> 32,555
<CGS> 4,839
<TOTAL-COSTS> 11,125
<OTHER-EXPENSES> 18,990
<LOSS-PROVISION> (48)
<INTEREST-EXPENSE> 34
<INCOME-PRETAX> 2,601
<INCOME-TAX> 1,041
<INCOME-CONTINUING> 1,560
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,560
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.00
</TABLE>
