-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SnFrpxu412jO9zPp2BN4Uy2xJ8MnrE05r45OMt8J///PFGlZfbhGjOdazCE6Ndps r5D1J9MpizcqrYZ9YpsHjw== 0000950131-98-001454.txt : 19980304 0000950131-98-001454.hdr.sgml : 19980304 ACCESSION NUMBER: 0000950131-98-001454 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19980302 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYSTEM SOFTWARE ASSOCIATES INC CENTRAL INDEX KEY: 0000808207 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 363144515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-15322 FILM NUMBER: 98555149 BUSINESS ADDRESS: STREET 1: 500 W MADISON ST 32ND FLR CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 3126412900 10-K/A 1 FORM 10-K/A ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM 10-K/A (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 1997 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 0-15322 SYSTEM SOFTWARE ASSOCIATES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 36-3144515 -------- ---------- (STATE OR OTHER JURISDICTION (IRS EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER) 500 W. MADISON, 32ND FLOOR CHICAGO, ILLINOIS 60661 ----------------- ----- (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 258-6000 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 7% Convertible Subordinated Notes due 2002 Common Stock, par value $0.0033 per Share (Title of class) -------------- ---------------------- 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 --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of voting stock held by non-affiliates of the registrant based upon the closing sale price of the stock as reported on the Nasdaq National Market on January 22, 1998, was $286,429,516. At January 22, 1998, 46,586,848 shares of the registrant's Common Stock were outstanding. ================================================================================ PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item with respect to executive officers is set forth in Part I of this report, as originally filed. Information regarding directors is set forth below. ROGER E. COVEY, age 43, founded the Company and since November 1, 1994 has served as Chief Executive Officer and Chairman of the Board of the Company, positions which he also held from its inception in October 1981 until August 1991, at which time he was elected as Vice-Chairman of the Board. From September 1, 1994 until October 31, 1994, he served as the Company's Vice President-- Research and Development. He holds a B.S. degree from the University of Illinois and an M.B.A. and an M.A. in Chinese Art History, both from the University of Chicago. CASEY G. COWELL, age 45, has been a Director of the Company since December 1997. Mr. Cowell is Vice Chairman of 3Com Corporation. Prior to its merger with 3Com Corporation, Mr. Cowell served as President of U.S. Robotics from 1978 until January 1997. Mr. Cowell was also Chairman of the Board, Chief Executive Officer, and a Director of U.S. Robotics since 1978. Mr. Cowell founded U.S. Robotics in 1976. Mr. Cowell also serves on the boards of PLATINUM technology, inc., May & Speh, Northwestern Memorial Corporation, a parent company of Northwestern Memorial Hospital, and as a trustee of the Illinois Institute of Technology. Mr. Cowell holds a B.A. degree from the University of Chicago. ANDREW J. FILIPOWSKI, age 47, has been a Director of the Company since July 1996. Mr. Filipowski has been President and Chief Executive Officer of PLATINUM technology, inc., a provider of enterprise infrastructure software products, since that company's founding in April 1987. Mr. Filipowski was a founder of DBMS, Inc., a software products and services company and served as its Chairman, President and Chief Executive Officer from 1979 until March 1987. JOHN W. PUTH, age 68, has been a Director of the Company since his appointment in April 1988. Since December 1987, Mr. Puth has served as President of J.W. Puth Associates, an industrial consulting firm. From January 1983 through December 1987, Mr. Puth was Chairman and President of Clevite Industries, Inc., a manufacturer of industrial products. From October 1975 until January 1983, Mr. Puth was President and Chief Executive Officer of Vapor Corporation. Mr. Puth is a director of Allied Products Corporation, Brockway, A.M. Castle & Co., L.B. Foster Company, Lindberg Corporation and USFreightways Corporation, as well as several privately-held corporations. He holds a B.S. degree from Lehigh University. WILLIAM M. STUEK, age 55, was appointed President and Chief Operating Officer of the Company on January 5, 1998. Prior to joining the Company, he served in a variety of sales, marketing and operational management positions with IBM Corporation. From 1996 through 1997, Mr. Stuek served as IBM's General Manager of North American Operations, in which he oversaw all sales, marketing, customer service/support, administrative operations, and information technology. Before that, he was General Manager of North American Sales and spent three years as General Manager of Product Sales for Europe, Middle East and Africa. Mr. Stuek also served as Assistant General Manager of IBM's Software Division and as General Manager of AS/400 Worldwide Marketing. Mr. Stuek holds a B.S. degree from Colgate University. WILLIAM N. WEAVER, JR., age 63, has been a Director of the Company since December 1986 and its Assistant Secretary since March 1985. Mr. Weaver is a member of the law firm of Sachnoff & Weaver, Ltd., an Illinois professional corporation ("S&W"), which is counsel to the Company. Mr. Weaver has practiced law in the State of Illinois since 1964 and serves as a director of USFreightways Corporation, as well as several privately-held corporations. He holds an A.B. degree from Oberlin College and a J.D. from John Marshall Law School. The Company's executive officers are appointed by, and serve at the discretion of, the Board of Directors. All Directors hold office until the next annual meeting of stockholders or until their successors are duly elected and qualified. ITEM 11. EXECUTIVE COMPENSATION MANAGEMENT COMPENSATION The table below discloses the compensation awarded by the Company during the Company's last three fiscal years to the Chief Executive Officer and to each of the other two executive officers as of the end of fiscal 1997: Summary Compensation Table
Annual Compensation Long-term Compensation Awards --------------------- --------------------------------- Name and Principal Fiscal Position Year Salary ($) Bonus ($) Securities Underlying Options (#) ------------------ ------ ---------- --------- --------------------------------- Roger E. Covey, Chairman 1997 400,000 200,000 200,000 of the Board and Chief 1996 400,000 - 0 - - 0 - Executive Officer 1995 342,917 127,000 150,000 Joseph J. Skadra, Vice 1997 237,000 57,000 - 0 - President and Chief 1996 229,000 47,000 5,000 Financial Officer 1995 220,000 64,000 - 0 - Riz Shakir, Executive Vice 1997 228,333 52,000 125,000 President of Research 1996 211,250 43,000 30,000 and Development
- ----------------------- Option Grants in Fiscal 1997 The following table provides further information on individual stock option grants made in fiscal 1997 to the named executive officers. The table does not reflect as additional grants options canceled and immediately reissued at lower exercise prices. See "Ten-Year Option Repricings" below. The exercise prices set forth in the table are net of all repricings.
Potential Realizable Value Individual Grants at Assumed Annual Rates of ---------------------------------------------------------------------- Stock Price Appreciation(1) % of Total --------------------------- Number of Shares Options Granted Exercise Underlying Options to Employees in Price Expiration Name Granted (#)(2) Fiscal 1997 ($/Sh.) Date 5% ($) 10% ($) - ---- -------------- ----------------- -------- ---------- ------ ------- Roger E. Covey 200,000 27.2% 7.81 06-13-07 982,333 2,489,426 Joseph J. Skadra - 0 - N.A. N.A. N.A. N.A. N.A. Riz Shakir 20,000 2.7% 4.63 01-14-07 58,173 147,421 20,000 2.7% 4.63 04-10-07 58,173 147,421 85,000 11.6% 8.06 08-04-07 430,856 1,091,873
- ----------------------- (1) The potential realizable value columns of the table illustrate values that might be realized upon exercise of the options immediately prior to their expiration, assuming the Company's Common Stock appreciates at the compounded rates specified over the term of the options. These numbers do not take into account provisions of certain options providing for termination of the option following termination of employment or nontransferability of the options and do not make any provision for taxes associated with exercise. Because actual gains will depend, among other things, on future performance of the Common Stock, the amounts reflected in this table may not necessarily be achieved. For the actual historical price performance of the Company's Common Stock over the last five fiscal years, see the comparative table below under the caption "Stockholder Return Performance Presentation." (2) Options granted become exercisable ratably on the first five anniversaries of the grant date. Aggregated Option Exercises in Fiscal 1997 and October 31, 1997 Option Values The following table provides information on option exercises in fiscal 1997 by the named executive officers and the value of such officers' unexercised stock options as of October 31, 1997.
Number of Shares Underlying Value of Unexercised In-the- Unexercised Options at Money Options at Shares October 31, 1997 (#) October 31, 1997 ($) Acquired on Value -------------------- -------------------- Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable - ---- ------------ ------------ ----------- ------------- ----------- ------------- Roger E. Covey -0- N.A. -0- 2,000 -0- 787,400 Joseph J. Skadra -0- N.A. 19,000 22,000 135,375 156,750 Riz Shakir -0- N.A. 30,002 169,998 213,764 919,006
Compensation of Directors The Company does not pay directors any cash consideration for serving on the Board of Directors. In recognition of their continued board service, the Company on December 16, 1994, adopted a policy pursuant to which every five years, all non-employee directors shall be awarded an option under the Company's existing stock option plans to purchase 22,500 shares, exercisable at the fair market value of the Company's stock on the date of grant, such options to become exercisable in equal portions on the first five anniversaries of the grant date. The first award under this plan was granted on December 16, 1994, and is exercisable at $4.63 per share. Pursuant to the same policy, Mr. Cowell was awarded options to purchase 22,500 shares and an additional 13,500 shares concurrently with his appointment to the Board of Directors in December of 1997. These options vest in five equal installments on the first five anniversaries of their appointment, and are exercisable at $9.69 per share, the fair market value of the Company's stock on the date of grant. In June of 1997, Messrs. Filipowski and Puth and S&W were awarded options to purchase 18,000, 36,000 and 36,000 shares, respectively at $7.81, the fair market value of the Company's stock on the date of the grant. In consideration of this and earlier option grants, S&W agreed to waive its fees for Mr. Weaver's time expended attending meetings of the Board of Directors. Accordingly, neither Mr. Weaver nor S&W received any cash compensation in consideration of Mr. Weaver's services as a director in fiscal 1997. Employment Contracts William M. Stuek, the Company's (President and) Chief Operating Officer, was hired on January 5, 1998 for a term of five years. The terms of his engagement are set forth in an employment agreement that includes the following: a base salary of $500,000, bonuses of up to $300,000 annually if the Company achieves specified quarterly and annual earnings targets and other management objectives, options to purchase 300,000 shares of Common Stock and otherwise in accordance with the term of the Company's Long-Term Incentive Plan, vesting over five years, an engagement bonus of $1,583,250 and a one-time bonus of $5,000,000 if the Company's common stock equal or exceeds. The employment agreement also is a non-competition and confidential clause which are to apply throughout Mr. Stuek's employment and for a period of one year thereafter. Joseph J. Skadra, the Company's Chief Financial Officer, was hired August 12, 1994. The terms of his engagement include the following: a base salary of $220,000 annually; bonuses of up to $80,000, in the first year, to be awarded if the Company achieves quarterly and annual earnings targets and if Mr. Skadra achieves specified personal management objectives; a bonus upon hiring of $40,000; and options to purchase 45,000 shares of Common Stock, vesting over five years, If all of the Company's Common Stock is acquired and Mr. Skadra does not become Chief Financial Officer of the acquiring firm, then 18,000 of the stock options will immediately vest, if they have not already. Riz Shakir, the Company's Executive Vice President of Research and Development, was hired June 1, 1994 and was appointed to his current position on November 1, 1996. The terms of his engagement include the following: a base salary of $180,000 annually; bonuses of $70,000, in the first year, to be awarded if the Company achieves quarterly and annual earnings targets and if Mr. Shakir achieves specified personal management objectives; a bonus upon hiring of $50,000; and options to purchase 30,000 shares of Common Stock, vesting over five years. Ten-Year Option Repricings The following table provides certain information on the repricing during fiscal 1996 and 1997 of options held by certain of the executive officers. No options had been repriced prior to fiscal 1996. Further explanation concerning these repricings is included in the Report on Executive Compensation of the Compensation Committee of the Board of Directors, below.
Number of Securities Market Price Length of Original Underlying of Stock at Exercise Price Option Term Options Time of at Time of New Exercise Remaining at Date Repriced or Repricing or Repricing or Price of Repricing or Name Date Amended (#) Amendment ($) Amendment ($) ($) Amendment ---- ---- ----------- ------------- -------------- ------------ ------------------ Roger E. Covey N.A. 0 N.A. N.A. N.A. N.A. N.A. 0 N.A. N.A. N.A. N.A. N.A. 0 N.A. N.A. N.A. N.A. N.A. 0 N.A. N.A. N.A. N.A. Joseph J. Skadra 08-26-96 5,000 $9.81 $16.13 $9.81 9 years, 9 months 03/27/97 36,000 7.50 9.83 7.50 7 years, 5 months 03/27/97 5,000 6.50 9.81 7.50 9 years, 2 months 03/31/97 36,000 5.81 7.50 5.81 7 years, 5 months 03/31/97 5,000 5.81 7.50 5.81 9 years, 2 months 04-10-97 36,000 4.63 9.83 4.63 7 years, 4 months 04-10-97 5,000 4.63 9.81 4.63 9 years, 1 month Riz Shakir 06/07/96 30,000 16.13 24.08 16.13 9 years, 5 months 08/26/96 30,000 9.81 16.13 9.81 9 years, 3 months 08/26/96 15,000 9.81 18.08 9.81 9 years, 6 months 03/27/97 30,000 7.50 9.83 7.50 7 years, 2 months 03/27/97 15,000 7.50 9.81 7.50 8 years 03/27/97 30,000 7.50 9.81 7.50 8 years, 8 months 03/27/97 20,000 7.50 11.50 7.50 9 years, 10 months 03/31/97 30,000 5.81 7.50 5.81 7 years, 2 months 03/31/97 15,000 5.81 7.50 5.81 8 years 03/31/97 30,000 5.81 7.50 5.81 8 years, 8 months 03/31/97 20,000 5.81 7.50 5.81 9 years, 10 months 04/10/97 30,000 4.63 5.81 4.63 7 years, 1 month 04/10/97 15,000 4.63 5.81 4.63 7 years, 11 months 04/10/97 30,000 4.63 5.81 4.63 8 years, 7 months 04/10/97 20,000 4.63 5.81 4.63 9 years, 9 months
Riz Shakir 08-26-96 30,000 $9.81 $24.08 $9.81 9 years, 3 months 04-10-97 30,000 4.63 9.83 4.63 7 years, 1 month 04-10-97 15,000 4.63 9.81 4.63 7 years, 11 months 04-10-97 30,000 4.63 9.81 4.63 8 years, 7 months 04-10-97 20,000 4.63 11.5 4.63 9 years, 9 months
Report on Executive Compensation of the Compensation Committee of the Board of Directors The Compensation Committee of the Company's Board of Directors is responsible for implementing specific executive compensation plans. The Company operates in an industry that is highly competitive. The Company believes that its ability to maintain and improve its competitive position is dependent on its ability to attract highly qualified managerial personnel. These personnel are customarily sought from companies much larger and with greater financial resources than the Company, and the Company believes that its ability to attract such personnel is enhanced by the Company's emphasis on significant short-term and long-term performance incentives. The Company accordingly operates in accordance with the following executive compensation philosophy: 1. A significant portion of annual cash compensation should be determined by quantitative performance measures. For SSA executives, the performance-dependent portion of annual cash compensation approximates 40% of base cash compensation. These quantitative performance measures are tied directly to the SSA annual business plan. A portion is based on quarterly earnings per share and another portion is based on annual earnings per share. In addition, a variety of other quantitative measures besides earnings per share are included in determining the bonus and future base compensation for each executive. These other measures vary from executive to executive depending on the strategic needs of the business, and tend to be directly related to the executive's duties and the achievements of the specific business unit for which the executive is responsible. The components are reviewed and adjusted by the Compensation Committee on an annual basis. Based on the Company's hiring experience and discussions with executive recruiting firms, the Company believes that base cash compensation for key employees (which approximates 70% of annual cash compensation) is at an industry competitive level. 2. Compensation should provide incentives for both short-term and, more importantly, for long-term performance. Short-term performance is incentivized by the annual performance-determined compensation mentioned above. Long-term performance is incentivized by the use of stock options. Typically, options granted vest over a five-year period, which is an appropriate long-term performance period. The Company's experience is that it has no control over its short- or medium-term stock price, but believes that over the long term the stock price should reflect growth of the Company's earnings. The size of option grants is determined by reference to all the facts and circumstances relating to the executive's compensation. These include, without limitation, the executive's base salary, the cash bonuses earned and potentially available, the size of all past option grants to the executive, the timing of such prior grants, the remaining unvested portion of past grants, the total shares subject to outstanding options held by all key employees and the total remaining shares available for future option grants. 3. The SSA standard for executive recruitment is to attempt to find and recruit the best person in the world for a given executive position. The compensation of Roger E. Covey, the Company's Chairman and Chief Executive Officer, for services he rendered during fiscal 1997 was determined pursuant to a compensation program adopted by the Committee in December 1994, shortly after Mr. Covey resumed the position of Chairman and Chief Executive Officer. At that time, the Committee reviewed the compensation packages of the chief executives of comparable publicly-traded software companies, some of which the Committee believes are included in the NASDAQ CDP index used in the stock price performance chart below, as well as the compensation of the Company's immediate past Chairman, President and Chief Executive Officer. Based on the review of comparable and historical compensation levels, the Company's operating plan for fiscal 1995, and the services rendered and to be rendered by Mr. Covey, the Committee adopted a compensation program consisting of base salary, bonus and incentive and non-qualified options to purchase 150,000 shares of the Company's Common Stock, which options vest over a five year period following their grant. In April of 1997, Mr. Covey surrendered to the Company his option to purchase 200,000 shares of the Company's Common Stock in order to supply the Company's option plan pool with additional shares in order to attract and retain key personnel. Subsequently in June of 1997, Mr. Covey was granted an option to purchase 200,000 shares to become exercisable at $7.81 per share, the Company's fair market value on the reissuance date. In addition to the base salary and stock options discussed above, Mr. Covey's compensation program provided that he would be awarded bonuses in specified amounts if the Company achieved certain quarterly and annual per-share earnings targets, product release targets and other quantitative measures. In fiscal 1997, Mr. Covey received no raise in base salary from fiscal 1996, and was awarded a $200,000 bonus based on Mr. Covey's efforts in the Company's public offering of September 1997. On three occasions in Fiscal 1997, the Board determined to reprice the outstanding stock options of holders. The software industry is extremely competitive and stock options are the major long-term compensation tool used to attract, retain, motivate and reward key employees. During the second quarter of Fiscal 1997 the Company's stock price declined very sharply. Since there was no reasonable expectation that the options would have the desired effect, the Compensation Committee, in consultation with the Chief Executive Officer repriced the outstanding stock options of holders three times to the Company's fair market value on the given repricing date: (1) on March 27, 1997, options having an exercise price at or above $7.50 were repriced to become exercisable at $7.50 per share; (2) on March 31, 1997, options having an exercise price at or above $5.81 were repriced to become exercisable at $5.81 per share; and (3) on April 10, 1997, options having an exercise price at or above $4.63 were repriced to become exercisable at $4.63 per share. The foregoing report has been furnished by Messrs. Filipowski and Puth and Weaver, who currently constitute the Compensation Committee. Compensation Committee Interlocks and Insider Participation During fiscal 1997, the Compensation Committee of the Board of Directors consisted of Andrew J. Filipowski , John W. Puth and William N. Weaver. None of these persons was a current or former officer or employee of the Company or any of its subsidiaries. Mr. Weaver is a member of S&W, which provides legal services to the Company. See "Certain Relationships and Related Transactions." STOCKHOLDER RETURN PERFORMANCE PRESENTATION The following graph presents a comparison of the cumulative total stockholder return on the Company's Common Stock since October 31, 1992 with the cumulative total return of the NASDAQ Computer and Data Processing Index ("NASDAQ CDP Index") and the Standard and Poor's 500 Composite Index. Note: The stock price performance shown below is not necessarily indicative of future price performance. Comparison of Five-Year Cumulative Total Return Among System Software Associates, Inc., NASDAQ CDP Index, and S & P 500
Measurement Period SYSTEM SOFTWARE S&P NASDAQ CDP (Fiscal Year Covered) ASSOCIATES, INC. 500 INDEX INDEX - --------------------- ---------------- --------- ---------- Measurement Pt- 10/31/92 $100 $100 $100 FYE 10/31/93 $100 $112 $115 FYE 10/31/94 $ 87 $119 $135 FYE 10/31/95 $217 $151 $217 FYE 10/31/96 $124 $187 $238 FYE 10/31/97 $125 $247 $321
Assumes $100 invested on October 31, 1992 in System Software Associates, Inc. Common Stock, NASDAQ CDP Index and S & P 500 Index. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of February 27, 1998 with respect to the beneficial ownership of the Company's outstanding Common Stock by each stockholder known by the Company to be the beneficial owner of more than 5% of its Common Stock, each director, each executive officer discussed under "Management Compensation" below, and all the directors and officers as a group. Except as otherwise indicated, the stockholders have sole voting and investment power with respect to shares beneficially owned by them.
Name and Address Amount and Nature of Percent of Beneficial Owner Beneficial Ownership of Class ------------------- -------------------- --------- Roger E. Covey.......................................... 13,124,750 (2) 31.1% System Software Associates 500 W. Madison Street, 32nd Floor Chicago, Illinois 60661 Gardner Lewis Asset Management, L.P..................... 4,213,124 (3) 9.86% 285 Wilmington, W. Chester Pike Chadds Ford, PA 19317 Hambrecht & Quist Group................................. 3,393,452 (5) 6.7% One Bush Street San Francisco, CA 94104 FMR Corp. .............................................. 3,657,942 (4) 8.40% 82 Devonshire Street Boston, MA 02109 Massachusetts Financial Services Company................ 2,423,663 (6) 5.7% 500 Boylston Street Boston, MA 02116 William N. Weaver, Jr................................... 347,250 (7) * John W. Puth............................................ 108,375 (1)(8) * Riz Shakir.............................................. 47,002 *
Name and Address Amount and Nature of Beneficial Percent of Beneficial Owner Ownership of Class ------------------- ------------------------------- -------- Andrew J. Filipowski.................................... 3,000 * Joseph J. Skadra........................................ 0 * Casey G. Cowel.......................................... 0 * All Officers and Directors as a Group (seven persons)... [13,913,682] [(1)(2)(7)(8)] [32.5%]
- -------------------------------- * Less than 1%. (1) Includes options to acquire shares, exercisable within 60 days of February 27, 1998, as follows: Mr. Filipowski 3,000; Mr. Puth 47,250; and Mr. Shakir 47,002 shares. (2) Includes 1,000,000 shares held by the Teng Research Foundation, of which Mr. Covey is a Director. (3) According to a Report on the SEC's Schedule 13G filed for fiscal 1997, Gardner Lewis Asset Management has sole dispositive power for all 4,213,124 listed shares, and exercises sole voting power over 3,831,325 shares and shared voting power over 48,600 of such shares. (4) According to a Report on the SEC's Schedule 13G filed for fiscal 1997, FMR Corp. has shared dispositive power over 3,657,942 shares and shared voting power over 3,657,942 shares. (5) According to a Report on the SEC's Schedule 13G filed for fiscal 1997, Hambrecht & Quist Group has shared dispositive power over 3,393,452 and shared voting power over 3,393,452 shares. (6) According to a Report on the SEC's Schedule 13G filed for fiscal 1997, Massachusetts Financial Services Company has sole dispositive power over 2,423,663 shares and sole voting power over 2,423,663 shares. (7) Includes 47,250 unissued shares of the Company's Common Stock, subject to a currently exercisable option held by Sachnoff & Weaver, Ltd., of which Mr. Weaver is a member. Mr. Weaver disclaims beneficial ownership of all but his pro rata portion of the shares covered by the option. (8) Includes 5,000 shares held by a family partnership, of which Mr. Puth is a general partner. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS William N. Weaver, Jr., a member of the Board of Directors, is a member of the law firm of Sachnoff & Weaver, Ltd., an Illinois professional corporation. Sachnoff & Weaver, Ltd. has acted and continues to act as counsel to the Company with regard to certain matters and has received legal fees for services rendered in connection therewith. Joseph J. Skadra, the Company's Chief Executive Officer, has borrowed funds from the Company commencing July 10, 1996. Amounts borrowed are represented by a promissory note, and bear interest at 8.25% per annum. Mr. Skadra borrowed the amounts for personal reasons. As of February 27, 1998, the amount owing, including accrued interest, is $220,500, which constitutes the largest amount which has been outstanding under such arrangements. Repayment of all amounts of principal is due January 21, 2000. Interest is payable monthly in arrears. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, as amended, the registrant has caused this amendment to report to be signed on its behalf by the undersigned, thereunto duly authorized. SYSTEM SOFTWARE ASSOCIATES, INC. March 2, 1998 /s/ JOSEPH J. SKADRA ----------------------- Joseph J. Skadra, Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----