10-Q

-----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, CeRkHzHCtJzf7vuJBQB4TiR2cxg5QPl1BrI5mpadATjkRPc2ApwKVThQWFOgarqa R3Z3OT7DzOdaDSDR++KXOA== 0000950137-09-003638.txt : 20090506 0000950137-09-003638.hdr.sgml : 20090506 20090506112628 ACCESSION NUMBER: 0000950137-09-003638 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20090331 FILED AS OF DATE: 20090506 DATE AS OF CHANGE: 20090506 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPSS INC CENTRAL INDEX KEY: 0000869570 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 362815480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-34103 FILM NUMBER: 09800203 BUSINESS ADDRESS: STREET 1: 233 S WACKER DR CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3123292400 MAIL ADDRESS: STREET 1: 233 SOUTH WACKER DRIVE CITY: CHICAGO STATE: IL ZIP: 60606 10-Q 1 c50807e10vq.htm FORM 1O-Q 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2009

Commission File Number: 001-34103

SPSS Inc.

(Exact name of registrant as specified in its charter)


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

233 S. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices and zip code)

Registrant’s telephone number including area code: (312) 651-3000

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of the registrant’s Common Stock, par value $0.01, as of April 30, 2009, was 18,326,131.

SPSS INC.
FORM 10-Q
QUARTER ENDED MARCH 31, 2009

INDEX


	PAGE
PART I – Financial Information
ITEM 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of December 31, 2008 and March 31, 2009		3
Consolidated Statements of Income for the three month periods ended March 31, 2008 and 2009		4
Consolidated Statements of Comprehensive Income for the three month periods ended March 31, 2008 and 2009		5
Consolidated Statements of Cash Flows for the three month periods ended March 31, 2008 and 2009		6
Notes to Consolidated Financial Statements		7
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk		20
ITEM 4. Controls and Procedures		20

PART II – Other Information
ITEM 1. Legal Proceedings		22
ITEM 6. Exhibits		23
EX-10.1
EX-10.2
EX-10.3
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I – Financial Information

ITEM 1. Financial Statements (unaudited)

SPSS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	December 31,			March 31,
	2008			2009
ASSETS
Current assets:
Cash and cash equivalents	$	305,917		$	311,455
Accounts receivable, net		43,172			37,953
Inventories, net		433			497
Deferred income taxes, net		4,142			3,346
Prepaid income taxes		5,738			7,890
Other current assets		4,693			5,081

Total current assets		364,095			366,222


Property, equipment and leasehold improvements, net		14,323			13,112
Capitalized software development costs, net		37,470			37,517
Goodwill		41,845			41,459
Intangibles, net		2,091			1,885
Deferred income taxes		20,728			17,935
Other noncurrent assets		3,673			3,447

Total assets	$	484,225		$	481,577


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,391		$	6,908
Income taxes and value added taxes payable		10,877			11,452
Deferred revenues		83,638			78,027
Other accrued liabilities		22,146			17,297

Total current liabilities		123,052			113,684


Long-term debt (see Note 8)		128,106			126,631
Noncurrent deferred income taxes, net		8,509			7,794
Other noncurrent liabilities		1,937			1,857

Stockholders’ equity:
Common Stock, $.01 par value; 50,000,000 shares authorized; 18,172,910 and 18,266,891 issued at December 31, 2008 and March 31, 2009, respectively		182			183
Additional paid-in capital (see Note 8)		164,373			166,306
Accumulated other comprehensive loss		(16,197	)		(18,506	)
Retained earnings (see Note 8)		74,263			83,628

Total stockholders’ equity		222,621			231,611

Total liabilities and stockholders’ equity	$	484,225		$	481,577

See accompanying notes to consolidated financial statements.

SPSS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)


	Three Months Ended March 31,
	2008			2009
Net revenues:
License	$	38,417		$	33,770
Maintenance		32,147			32,495
Services		7,677			5,816


Net revenues		78,241			72,081


Operating expenses:
Cost of license and maintenance revenues		5,299			4,612
Sales, marketing and services		39,160			31,137
Research and development		11,381			10,977
General and administrative		8,536			8,131


Operating expenses		64,376			54,857


Operating income		13,865			17,224


Other income (expense):
Interest expense (see Note 8)		(2,440	)		(2,523	)
Interest income		2,977			817
Gain on convertible debt retirement		—			356
Other		300			(1,240	)

Other income (expense)		837			(2,590	)


Income before income taxes		14,702			14,634
Income tax expense		5,664			5,269


Net income	$	9,038		$	9,365


Basic net income per share	$	0.50		$	0.51


Diluted net income per share	$	0.47		$	0.48


Share data:
Shares used in computing basic net income per share		17,916			18,233


Shares used in computing diluted net income per share		19,181			19,423

See accompanying notes to consolidated financial statements.

SPSS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2008		2009
Net income	$	9,038	$	9,365

Other comprehensive income (loss):
Foreign currency translation adjustment		1,961		(2,309	)


Comprehensive income	$	10,999	$	7,056

See accompanying notes to consolidated financial statements.

SPSS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,
	2008			2009
Cash flows from operating activities:
Net income	$	9,038		$	9,365
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,667			4,527
Convertible debt amortization		1,458			1,539
Deferred income taxes		(109	)		2,965
Excess tax benefit from share-based compensation		(148	)		77
Amortization of share-based compensation		2,069			1,971
Gain on convertible debt retirement		—			(356	)
Changes in assets and liabilities:
Accounts receivable		10,375			3,888
Inventories		(36	)		(67	)
Prepaid and other assets		(1,749	)		(503	)
Accounts payable		(310	)		650
Accrued expenses		(8,621	)		(4,681	)
Income taxes		372			(1,347	)
Deferred revenue		(1,799	)		(3,345	)
Other, net		(1,064	)		1,160

Net cash provided by operating activities		14,143			15,843


Cash flows from investing activities:
Capital expenditures		(945	)		(591	)
Capitalized software development costs		(3,099	)		(2,866	)

Net cash used in investing activities		(4,044	)		(3,457	)


Cash flows from financing activities:
Proceeds from stock option exercises and employee stock purchase plan		2,101			828
Tax benefit from stock option exercises		148			—
Retirement of convertible debt		—			(3,084	)
Purchases of common stock		(27,870	)		—

Net cash used in financing activities		(25,621	)		(2,256	)


Effect of exchange rates on cash		3,178			(4,592	)

Net change in cash and cash equivalents		(12,344	)		5,538

Cash and cash equivalents at beginning of period		306,930			305,917

Cash and cash equivalents at end of period	$	294,586		$	311,455


Supplemental disclosures of cash flow information:
Interest paid	$	1,888		$	1,877
Income taxes paid		3,935			4,877
Cash received from income tax refunds		21			142

See accompanying notes to consolidated financial statements.

SPSS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – Basis of Presentation

The accompanying consolidated financial statements of SPSS Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions to United States Securities and Exchange Commission Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. It is presumed that the reader has already read the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included in these consolidated financial statements. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the fiscal year. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Where appropriate, some items relating to prior years have been reclassified to conform to the presentation in the current year.

NOTE 2 – Share-Based Compensation

Share-based compensation expense, including expense related to restricted share units, under the provisions of SFAS No. 123(R) was comprised as follows (in thousands) :


	Three Months Ended March 31,
	2008		2009
Sales, Marketing and Services	$	409	$	295
Research and Development		280		206
General and Administrative		1,380		1,470

Total share-based compensation expense	$	2,069	$	1,971

NOTE 3 – Domestic and Foreign Operations

Net revenues per geographic region are summarized as follows (in thousands):


	Three Months Ended
	March 31,
	2008		2009
United States	$	30,909	$	28,502


United Kingdom		9,638		6,898
The Netherlands		10,446		8,500
Other		12,876		11,738

Total Europe		32,960		27,136


Japan		10,139		12,582
Other		4,233		3,861

Total Pacific Rim		14,372		16,443


Total International		47,332		43,579


Net revenues	$	78,241	$	72,081

NOTE 4 – Earnings Per Common Share

Earnings per common share (EPS) are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents outstanding (diluted) during the period. Common stock equivalents consist of contingently issuable shares, stock options and common shares issuable on conversion of the Company’s convertible notes. The Company computes the diluted weighted average shares outstanding using the treasury stock method. Basic weighted average shares reconciles to diluted weighted average shares as follows (in thousands):


	Three Months Ended
	March 31,
	2008		2009
Basic weighted average common shares outstanding		17,916		18,233
Dilutive effect of options and other equity		1,265		1,190

Diluted weighted average common shares outstanding		19,181		19,423


Anti-dilutive shares not included in diluted EPS calculation		2		101

NOTE 5 – Cost Management Programs

During 2007, the Company incurred expenses totaling $4.6 million related to a management reorganization and a planned consolidation of certain research and development facilities. These costs principally included employee severance costs, lease exit costs and the write-off of leasehold improvements. These costs are primarily recorded as a component of Research and Development expense in the Consolidated Statements of Income. As of March 31, 2009, the Company has remaining approximately $0.8 million in other accrued liabilities and $0.2 million in other noncurrent liabilities related to these expenses and expects the liabilities to be paid in 2009.

During 2008, the Company incurred expenses totaling $4.8 million related to a cost management program involving staff reorganization and reduction. These costs primarily included employee severance costs and are primarily recorded as a component of Sales, Marketing and Services expense in the Consolidated Statements of Income. As of March 31, 2009, the Company has remaining approximately $0.1 million in other accrued liabilities related to these expenses and expects the liabilities to be paid in 2009.

NOTE 6 – Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. This statement is effective for fiscal years beginning after November 15, 2007. On February 14, 2008 the FASB issued FSP FAS No. 157-1 “Application of FASB Statement No. 157 to FASB Statement 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement Under Statement 13” that amends SFAS No. 157 to exclude its application for purposes of lease classification or measurement under SFAS13. On February 12, 2008, the FASB issued Staff Position Financial Accounting Standard (FSP FAS) No. 157-2 “Effective Date of FASB Statement No. 157” that amends SFAS No. 157 to delay the effective date for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis to fiscal years beginning after November 15, 2008. The Company adopted the required provisions of SFAS No. 157-1 effective January 1, 2008 and there was no material effect on its consolidated financial statements. On January 1, 2009, the Company adopted FSP 157-2 and it did not have a material impact on its consolidated financial statements. In October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a Financial Asset in a Market That Is Not Active.” The FSP was effective upon issuance, including periods for which financial statements have not been issued. The FSP clarified the application of SFAS 157 in an inactive market and provided an illustrative example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. The adoption of this FSP FAS 157-3 did not have a material impact on the Company’s consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position No. FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP No. FAS 142-3”). FSP No. FAS 142-3 requires companies estimating the useful life of a recognized intangible asset to consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, to consider assumptions that market participants would use about renewal or extension as adjusted for SFAS No. 142’s, Goodwill and Other Intangible Assets, entity-specific factors. FSP No. FAS 142-3 is effective for fiscal years beginning after December 15, 2008. The Company adopted FSP No. FAS 142-3 on January 1, 2009. The adoption of FSP No. FAS 142-3 did not have a material effect on its consolidated financial statements.

In May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles. SFAS No. 162 becomes effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company does not expect that the adoption of SFAS No. 162 to have a material effect on its consolidated financial statements.

On January 1, 2009, the Company adopted FASB No. 141 (Revised 2007), “Business Combinations” (“FAS No. 141(R)”). FAS No. 141(R) significantly changed the accounting for business combinations. Under FAS No. 141(R), an acquiring entity is required to recognize all the assets acquired and all the liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. Transaction costs are no longer included in the measurement of the business acquired. Instead, these costs are expensed as they are incurred. FAS No. 141(R) also includes a substantial number of new disclosure requirements. FAS No. 141(R) applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of FAS No. 141(R) did not have a material impact on the Company’s consolidated financial statements.

NOTE 7 – Contingencies

Basu Litigation

SPSS Inc. has been named as a defendant in a lawsuit filed on December 6, 2002 in the United States District Court for the Southern District of New York, under the caption Basu v. SPSS Inc., et al., Case No. 02CV9694. The complaint alleges that, in connection with the issuance and initial public offering of shares of common stock of NetGenesis Corp., the registration statement and prospectus filed with the Securities and Exchange Commission in connection with the IPO contained material misrepresentations and/or omissions. The alleged violations of the federal securities laws took place prior to December 31, 2001, the effective date of the merger in which the Company’s acquisition subsidiary merged with and into NetGenesis Corp. NetGenesis Corp. is now a wholly owned subsidiary of SPSS. Other defendants to this action include the former officers and directors of NetGenesis Corp. and the investment banking firms that acted as underwriters in connection with the IPO. The plaintiff is seeking unspecified compensatory damages, prejudgment and post-judgment interest, reasonable attorney fees, experts’ witness fees and other costs and any other relief deemed proper by the Court. The Company is aggressively defending itself, and plans to continue to aggressively defend itself against the claims set forth in the complaint. The Company and the named officers and directors filed an answer to the complaint on July 14, 2003. At this time, the Company believes the lawsuit will be settled with no material adverse effect on its results of operations, financial condition, or cash flows.

Trademark Litigation

On January 3, 2008, the Company filed a complaint for declaratory judgment in the U.S. District Court for the Northern District of Illinois against Norman H. Nie and C. Hadlai Hull. The filing of the complaint was in response to recent assertions by Dr. Nie that the Company’s use of the SPSS trademark was subject to a License Agreement (the “Agreement”) dated September 30, 1976 between a predecessor of the Company, as licensee, and Norman H. Nie and C. Hadlai Hull, as licensors. Dr. Nie stated his desire to enforce his alleged rights under the Agreement, which he claimed included the right to inspect and approve products sold under the SPSS trademark and to obtain other information regarding those products. The complaint seeks a declaratory judgment that Dr. Nie and Mr. Hull are estopped from enforcing any rights under the Agreement and that the Company shall be deemed to have an irrevocable, assignable and exclusive license to use the SPSS trademark.

On January 28, 2008, Dr. Nie and Mr. Hull filed a counterclaim against the Company. The counterclaim asserts that the Company has repudiated the Agreement and that the Company’s use of the SPSS trademark is unauthorized and constitutes an infringement on their rights as owners of the trademark. The counterclaim seeks an injunction prohibiting the Company from continuing to use the SPSS trademark and an award of damages, costs and attorneys fees.

On February 15, 2008, the Company filed its answer to the counterclaim. In its answer, the Company denies liability for trademark infringement and asserts that Dr. Nie and Mr. Hull are barred from asserting the counterclaim on several grounds, including but not limited to the doctrines of estoppel, laches and waiver.

In May 2008, Dr. Nie filed an amended counterclaim to reflect that Mr. Hull had subsequently assigned his claims to Dr. Nie. Discovery has been completed. Each of the Company and Dr. Nie filed motions for summary judgment. Each motion for summary judgment was denied by the Court on April 2, 2009. The Court has set October 5, 2009 as the trial date.

On April 27, 2009, Dr. Nie filed a complaint against the Company in the Court of Chancery of the State of Delaware seeking the advancement of legal fees and expenses incurred by Dr. Nie in connection with the action described above. The complaint seeks a declaration that SPSS must pay all such legal fees and expenses (both fees incurred to date and any fees to be incurred in the future), the payment of interest on all legal fees and expenses incurred by Dr. Nie to date and all legal fees and expenses incurred in connection with this action in Delaware.

NOTE 8 – Implementation of FASB Staff Position No. APB 14-1

The Company adopted the provisions of FASB Staff Position No. APB 14-1 (“FSP” or “FSP No. APB 14-1”), “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” on January 1, 2009. FSP No. APB 14-1 requires that issuers of convertible debt instruments that may be settled in cash upon conversion separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.

The FSP requires retrospective application related to the Company’s convertible debt that was outstanding during the periods presented in the financial statements. As the Company issued its convertible bonds on March 19, 2007, the Company applied FSP No. APB 14-1 retrospectively to 2008 including the following effects on the Company’s income statement captions for the three months ended March 31, 2008:


	Three Months Ended March 31, 2008
	(In thousands, except per share data)
			Effect of Change
	As originally		in Accounting
	reported		Principle			As adjusted
Interest expense	$	1,157	$	1,283		$	2,440
Net income	$	9,830	$	(792	)	$	9,038

Diluted earnings per share	$	0.51	$	(0.04	)	$	0.47

The FSP also requires recognition of the cumulative effect of this accounting change to be recognized as of the beginning of the first period presented. This cumulative effect of adopting FSP No. APB 14-1 resulted in the following changes to the Company’s December 31, 2008 balance sheet:

	•		decrease to convertible debt of $21.9 million;

	•		increase to additional paid-in capital of $17.3 million;

	•		increase to non-current deferred tax liability of $7.5 million;

	•		decrease to other assets of $2.8 million; and

	•		decrease of $5.7 million to retained earnings for the cumulative net income effect of adopting the FSP.

Additional details related to the Company’s adoption of FSP No. APB 14-1 include the following:


	Three Months Ended March 31,
	2008			2009
	(In thousands, except percentage data)
Interest expense — Contractual interest coupon	$	939		$	939
Interest expense — Debt discount amortization		1,283			1,365
Interest expense — Debt issuance cost amortization		218			219

Total interest expense	$	2,440		$	2,523


Effective interest rate on the liability component		7.2	%		7.2	%


	As of March 31, 2009
	($ in thousands)
Net carrying amount of liability component	$	126,631
Unamortized transaction costs with third parties allocated to liability		1,985
Unamortized discount of liability component		17,884

Principal amount of the liability component	$	146,500


Net carrying amount of equity component	$	17,077


Remaining amortization period of discount of liability component	2.96 Years

The 2.50% Convertible Subordinated Notes due 2012 (the “Convertible Notes”) will be convertible into cash and, if applicable, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) based on an initial conversion rate of

21.3105 shares of Common Stock per $1,000 principal amount of Convertible Notes (which is equal to an initial conversion price of approximately $46.93 per share) upon the occurrence of certain events.

NOTE 9 – Convertible Notes Repurchase

On March 11, 2009, the Company announced that its Board of Directors had authorized the Company to repurchase up to a maximum of $40 million of its issued and outstanding 2.50% Convertible Subordinated Notes due 2012 (the “Convertible Notes”). These repurchases are not mandatory and will be made from time to time based on the availability of alternative investment opportunities and market conditions. This authorization expires on December 31, 2009. On March 20, 2009, the Company repurchased $3.5 million principal amount of the Convertible Notes at a cost of $3.1 million. The Company recognized a gain of $0.4 million related to this Convertible Note repurchase reflected in the line caption “Gain on convertible debt retirement” in the consolidated statements of income. Following this repurchase, $36.9 million remains available under the authorization and $146.5 million principal amount of the Convertible Notes remain outstanding.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to historical information, this quarterly report on form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934, including, without limitation, statements regarding the Company’s expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes,” “estimates” or similar language. All forward-looking statements included in this document are based on information available to the Company on the date hereof. The Company cautions investors that its business and financial performance and the matters described in these forward-looking statements are subject to substantial risks and uncertainties. Because of these risks and uncertainties, some of which may not be currently ascertainable and many of which are beyond the Company’s control, actual results could differ materially from those expressed in or implied by the forward-looking statements. The potential risks and uncertainties that could cause results to differ materially include, but are not limited to: the Company’s ability to predict revenue, the Company’s ability to respond to rapid technological changes, a potential loss of relationships with third parties from whom the Company licenses certain software, fluctuations in currency exchange rates, the impact of new accounting pronouncements, increased competition and risks associated with product performance and market acceptance of new products. A detailed discussion of these and other risk factors that affect the Company’s business is contained in the Company’s annual reports on form 10-K, particularly under the heading “Risk Factors.” The Company does not intend to update these forward-looking statements to reflect actual future events.

The following discussion should be read in conjunction with the Company’s financial statements and accompanying notes, which appear elsewhere in this Quarterly Report on Form 10-Q.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2008 TO THREE MONTHS ENDED MARCH 31, 2009.

NET REVENUE

Revenues by product category, related amount changes, related percent changes and percent of total revenues for the three months ended March 31, 2008 and three months ended March 31, 2009 were as follows:


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
License	$	38,417	$	33,770	$	(4,647	)		(12	)%		49	%		47	%
Maintenance		32,147		32,495		348			1	%		41	%		45	%
Services		7,677		5,816		(1,861	)		(24	)%		10	%		8	%

Net revenues	$	78,241	$	72,081	$	(6,160	)		(8	)%		100	%		100	%

Foreign currency exchange rates decreased net revenues by $5.3 million from the three months ended March 31, 2008 to the three months ended March 31, 2009. Excluding currency, revenues declined $0.8 million, or 1%, from the three months ended March 31,

2008 to the three months ended March 31, 2009 resulting from lower license revenue and service revenue partially offset by higher maintenance revenue as further explained in the related revenue captions below.

License revenue


	Three Months Ended
	March 31,		March 31,		Amount			Percentage
	2008		2009		Change			Change
	(In thousands)
United States	$	16,571	$	13,090	$	(3,481	)		(21	)%
Europe		12,106		9,155		(2,951	)		(24	)%
Pacific Rim		9,740		11,525		1,785			18	%

Net license revenues	$	38,417	$	33,770	$	(4,647	)		(12	)%

The overall decrease in license revenues from the three months ended March 31, 2008 to the three months ended March 31, 2009 was primarily due to the following:

	•		lower sales volume of desktop statistical tools and data mining tools of $2.1 million

	•		lower market research product revenue of $1.4 million

The decrease in revenue in the three months ended March 31, 2009 was generally due to lower sales volume for deals individually exceeding $75,000 in Europe, the impact of foreign currency exchange rates, lower demand in the United States and a more challenging economic environment in 2009. For the three months ended March 31, 2008, the Company closed 39 deals in Europe individually exceeding $75,000 and totaling $6.7 million compared with 31 deals individually exceeding $75,000 and totaling $4.9 million for the three months ended March 31, 2009. The decrease in revenue in the United States was primarily due to sales staff turnover and lower demand due to a more challenging economic environment.

Foreign currency exchange rates decreased license revenue by $2.1 million in Europe, most notably $0.8 million in the United Kingdom and $0.6 million in the Netherlands.

The revenue decreases in the United States and Europe were partially offset by higher revenue in the Pacific Rim. Revenues increased $1.8 million in the Pacific Rim principally due to higher revenues in Japan due to foreign currency of $1.0 million and higher sales volume of statistical tools of $0.9 million

Maintenance revenue


	Three Months Ended
	March 31,		March 31,		Amount			Percentage
	2008		2009		Change			Change
	(In thousands)
United States	$	11,113	$	12,971	$	1,858			17	%
Europe		17,118		15,519		(1,599	)		(9	)%
Pacific Rim		3,916		4,005		89			2	%

Net maintenance revenues	$	32,147	$	32,495	$	348			1	%

The overall increase in maintenance revenues from the three months ended March 31, 2008 to the three months ended March 31, 2009 was primarily due to continued strong demand for the Company’s maintenance support and product upgrades as well as higher renewal rates by the Company’s customer base across all major geographic regions (most notable in the desktop statistical tools and data mining product categories). These strong renewal rates were offset by changes in foreign currency exchange rates which decreased maintenance revenue by $3.2 million including $3.1 million in Europe.

Service revenue


	Three Months Ended
	March 31,		March 31,		Amount			Percentage
	2008		2009		Change			Change
	(In thousands)
United States	$	3,225	$	2,441	$	(784	)		(24	)%
Europe		3,736		2,462		(1,274	)		(34	)%
Pacific Rim		716		913		197			28	%

Net service revenues	$	7,677	$	5,816	$	(1,861	)		(24	)%

Service revenues decreased from the three months ended March 31, 2008 to the three months ended March 31, 2009 primarily due to a decline in consulting projects as a result of lower license revenue. Additionally, changes in foreign currency rates decreased service revenues in Europe by $0.7 million for the three month period ended March 31, 2009 including $0.4 million in the United Kingdom.

Net revenues per geographic region, percentage changes and percent of total revenues for the three month period ended March 31, 2009 was as follows:


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
United States	$	30,909	$	28,502	$	(2,407	)		(8	)%		40	%		40	%


United Kingdom		9,638		6,898		(2,740	)		(28	)%		12	%		9	%
The Netherlands		10,446		8,500		(1,946	)		(19	)%		13	%		12	%
Other		12,876		11,738		(1,138	)		(9	)%		17	%		16	%

Total Europe		32,960		27,136		(5,824	)		(18	)%		42	%		37	%


Japan		10,139		12,582		2,443			24	%		13	%		18	%
Other		4,233		3,861		(372	)		(9	)%		5	%		5	%

Total Pacific Rim		14,372		16,443		2,071			14	%		18	%		23	%


Total International		47,332		43,579		(3,753	)		(8	)%		60	%		60	%


Net revenues	$	78,241	$	72,081	$	(6,160	)		(8	)%		100	%		100	%

Net revenues derived internationally decreased 8% from the three month period ended March 31, 2008 to the three month period ended March 31, 2009. This decrease resulted from a revenue decline in almost all significant international markets throughout Europe including the United Kingdom, the Netherlands, France and Sweden partially offset by increases in Japan. These decreases reflected the impact of foreign currency exchange rates as well as declining demand for the Company’s desktop statistical and data mining tools and market research products. In particular, from the three months ended March 31, 2008 to the three months ended March 31, 2009, revenues declined in the United Kingdom by $2.7 million, or 28%, primarily reflecting the impact of changes in foreign currency exchange rates of $2.6 million and lower service revenue of $0.2 million. Additionally, revenues in the Netherlands declined by $1.9 million, or 19%, primarily reflecting the impact of changes in foreign currency exchange rates of $1.3 million and lower license revenues of $0.8 million. Net revenues derived in the United States decreased by 8% reflecting a decline in revenue from desktop statistical tools, data mining tools and market research products offset by growth in maintenance revenue.

Changes in foreign currency exchange rates were a significant factor and decreased international revenue from the three months ended March 31, 2008 to the three months ended March 31, 2009 as follows:


	Three months ended
	March 31,
	2009
Country (Currency)	(In thousands)
Netherlands (Euro)	$	(1,344	)
Other Euro-denominated countries		(1,337	)
United Kingdom (Pound)		(2,633	)
Japan (Yen)		1,287
Other currencies		(1,303	)

Total	$	(5,330	)

COST OF LICENSE AND MAINTENANCE REVENUES


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	5,299	$	4,612	$	(687	)		(13	)%		7	%		6	%

Cost of license and maintenance revenues consists of costs of goods sold, amortization of capitalized software development costs and royalties paid to third parties. These costs decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to a $0.4 million decrease in product material and delivery costs and a $0.1 million decrease in royalties paid to third parties as a result of lower license revenues. The Company expects the cost of license and maintenance revenues to remain relatively constant as a percentage of total revenues at approximately 6% for the remainder of 2009.

SALES, MARKETING AND SERVICES


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	39,160	$	31,137	$	(8,023	)		(20	)%		50	%		43	%

Sales, marketing and services expenses decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to decreased compensation costs associated with lower revenues, lower travel and entertainment expenditures and $1.6 million lower salaries resulting from the Company’s cost management initiatives implemented in the fourth quarter of 2008. Changes in foreign currency exchange rates contributed $3.0 million to the decrease in the three month period ended March 31, 2009. The Company expects sales, marketing and services costs to be approximately 45% of net revenues for the remainder of 2009.

RESEARCH AND DEVELOPMENT


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	11,381	$	10,977	$	(404	)		(4	)%		15	%		15	%

Research and development costs decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to decreased project related expenses, improved productivity and $0.7 million in lower salaries resulting from the Company’s cost management initiatives implemented in the fourth quarter of 2008. The Company expects the research and development costs to remain relatively constant as a percentage of total revenues at 15% for the remainder of 2009.

GENERAL AND ADMINISTRATIVE


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	8,536	$	8,131	$	(405	)		(5	)%		10	%		12	%

General and administrative expenses decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to lower travel and entertainment and lower salary expense associated with the Company’s cost management initiatives implemented in the fourth quarter of 2008.

OPERATING INCOME


	Three Months Ended
	March 31,		March 31,		Amount		Percentage			Percent of Net Revenues
	2008		2009		Change		Change			2008			2009
	(In thousands)
Three months ended March 31,	$	13,865	$	17,224	$	3,359		24	%		18	%		24	%

Operating income increased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to decreases in operating expenses in excess of the decrease in net revenues. Decreased operating expenses primarily resulted from lower cost of sales and lower selling expenses associated with the Company’s cost management initiatives described in Note 5. See further discussion of these expenses under the caption heading above.

INTEREST EXPENSE


	Three Months Ended
	March 31,		March 31,		Amount		Percentage			Percent of Net Revenues
	2008		2009		Change		Change			2008			2009
	(In thousands)
Three months ended March 31,	$	2,440	$	2,523	$	83		3	%		3	%		4	%

Interest expense consists of cash interest computed at the 2.50% coupon rate on the Company’s Convertible Subordinated Notes due 2012 and amortization of debt discount determined using the effective interest method. The increase in interest expense from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 was primarily due to the interest accretion on the additional debt discount amortization. See additional discussion in Note 8 to the Consolidated Financial Statements.

INTEREST INCOME


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Net Revenues
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	2,977	$	817	$	(2,160	)		(73	)%		4	%		1	%

Interest income decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 primarily due to lower interest rates on investment cash balances.

GAIN ON CONVERTIBLE DEBT RETIREMENT


	Three Months Ended
	March 31,		March 31,		Amount		Percentage	Percent of Net Revenues
	2008		2009		Change		Change	2008			2009
	(In thousands)
Three months ended March 31,	$	—	$	356	$	356	NM		—	%		—	%

On March 11, 2009, the Company announced that its Board of Directors had authorized the Company to repurchase up to a maximum of $40 million of its issued and outstanding 2.50% Convertible Subordinated Notes due 2012 (the “Convertible Notes”). During the three month period ended March 31, 2009, the Company repurchased $3.5 million principal amount of the Convertible Notes at a cost of $3.1 million resulting in a gain of $0.4 million.

OTHER INCOME (EXPENSE)


	Three Months Ended
	March 31,		March 31,			Amount			Percentage	Percent of Net Revenues
	2008		2009			Change			Change	2008			2009
	(In thousands)
Three months ended March 31,	$	300	$	(1,240	)	$	(1,540	)	NM		—	%		(1	)%

Other income (expense) changed from income for the three month period ended March 31, 2008 to expense for the three month period ended March 31, 2009 primarily due to transactional losses in 2009 resulting from changes in the value of Singapore dollar denominated receivables/payables, U.S. dollar denominated cash held in foreign countries and the decrease in value of U.S. dollar-denominated receivables held in international locations, principally related to the Euro and the British Pound.

INCOME TAX EXPENSE


	Three Months Ended
	March 31,		March 31,		Amount			Percentage			Percent of Pre-Tax Income
	2008		2009		Change			Change			2008			2009
	(In thousands)
Three months ended March 31,	$	5,664	$	5,269	$	(395	)		(7	)%		38.5	%		36.0	%

The income tax provision decreased from the three month period ended March 31, 2008 to the three month period ended March 31, 2009 principally reflecting higher research and development tax credits in 2009. Generally, the Company expects its full year effective tax rate to be 33% to 36% given the current geographic income mix.

LIQUIDITY AND CAPITAL RESOURCES

During the three month period ended March 31, 2009, SPSS generated cash in excess of its operating requirements. As of March 31, 2009, SPSS had $311.5 million in cash and cash equivalents compared with $305.9 million at December 31, 2008. The increase in cash principally resulted from cash generated from operating activities. Factors affecting cash and cash equivalents during the three month period ended March 31, 2009 include:

Operating Cash Flows:

	•		Cash derived from operating activities was $15.8 million. This cash resulted primarily from net income and receivable collections, partially offset by accrued expenses.

	•		Accounts receivable increased operating cash flow by $3.9 million reflecting favorable collections. Average days sales outstanding were 48 days at March 31, 2009, compared to 54 days at December 31, 2008 and 57 days at March 31, 2008.

	•		Accrued expenses decreased operating cash flow by $4.7 million and generally reflected payment of accrued severance related to the Company’s fourth quarter 2008 cost management initiative program.

Investing Activities:

	•		Capital expenditures were $0.6 million.

	•		Capitalized software development costs were $2.9 million.

Financing Activities:

	•		The Company utilized $3.1 million to repurchase the Company’s 2.50% Convertible Subordinated Notes due 2012.

	•		Cash proceeds of $0.8 million received from the issuance of common stock, primarily through the employee stock purchase plan.

Cash flows from operating activities were more than adequate to fund capital expenditures and software development costs of $3.5 million. Management believes that cash flows from future operating activities will be more than adequate to meet future capital expenditures and software development costs.

On March 19, 2007, the Company issued $150 million aggregate principal amount of 2.50% Convertible Subordinated Notes due 2012 (the “Convertible Notes”) in a private placement.

The Convertible Notes will be convertible into cash and, if applicable, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) based on an initial conversion rate of 21.3105 shares of Common Stock per $1,000 principal amount of Convertible Notes (which is equal to an initial conversion price of approximately $46.93 per share) only under the following circumstances: (1) during any calendar quarter (and only during such calendar quarter), if the closing sale price of the Common Stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 120% of the conversion price per share, which is $1,000 divided by the then applicable conversion rate; (2) during any five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of Convertible Notes for each day of that period was less than 98% of the product of the closing price of the Common Stock for each day in that period and the conversion rate; (3) if specified distributions to holders of the Common Stock occur; (4) if a fundamental change occurs; or (5) during the period beginning on February 15, 2012 and ending on the close of business on the business day immediately preceding the maturity date. If the Company makes a physical settlement election as described below, the Convertible Notes will become convertible at the option of the holder at any time after the date of such physical settlement election and prior to the close of business on the business day immediately preceding the maturity date of the Convertible Notes.

Unless the Company has made a physical settlement election, upon conversion of each $1,000 principal amount of Convertible Notes, a holder will receive, in lieu of Common Stock, an amount in cash equal to the lesser of (i) $1,000, or (ii) the conversion value of the Convertible Notes. If the conversion value exceeds $1,000 on the conversion date, the Company will also deliver as payment for the excess value, at its election, cash or Common Stock or a combination of cash and Common Stock. At any time prior to maturity, the Company may make a physical settlement election. A physical settlement election is the irrevocable election to provide upon conversion, in lieu of providing cash and Common Stock, shares of Common Stock equal to the conversion rate for each $1,000 principal amount of Convertible Notes converted.

On March 11, 2009, the Company announced that its Board of Directors had authorized the Company to repurchase up to a maximum of $40 million of its issued and outstanding Convertible Notes. These repurchases are not mandatory and will be made from time to time based on the availability of alternative investment opportunities and market conditions. This authorization expires on December 31, 2009. On March 20, 2009, the Company repurchased $3.5 million principal amount of the Convertible Notes at a cost of $3.1 million. Following this repurchase, $36.9 million remains available under the authorization and $146.5 million principal amount of the Convertible Notes remain outstanding.

As of March 31, 2009, the Convertible Notes were not convertible and the holders of the Convertible Notes had no right to require the Company to repurchase the Convertible Notes.

On March 27, 2008, the Company entered into a three-year senior revolving credit facility (the “Credit Facility”) that enables the Company to borrow up to $50 million. The Credit Facility was entered into between the Company and LaSalle Bank National Association, now known as Bank of America, as lender (the “Lender”). Borrowings under the Credit Facility may be borrowed by the Company (or one or more subsidiaries designated by the Company) in U.S. dollars, Australian dollars, Euros, Pounds Sterling, Japanese Yen and in other currencies that the Lender may approve from time to time. Borrowings under the Credit Facility will bear interest at a rate per annum equal to the applicable eurocurrency rate plus a 0.50% spread. The Company will pay a fee of 0.10% of the unused amount of the Credit Facility. The Company has guaranteed the obligations of all subsidiary borrowers under the Credit Facility. As of March 31, 2009, the Company had not borrowed any funds under this credit facility.

Borrowings under the Credit Facility are subject to the Company’s satisfaction of various conditions at the time of borrowing. The Credit Facility contains the following financial covenants:

	•		the Company is required to have consolidated EBITDA of at least $40,000,000 for each period of four consecutive fiscal quarters; and

	•		the Company is required to maintain a ratio of (a) (x) consolidated total debt less (y) cash and cash equivalents to (b) consolidated EBITDA of not greater than 2.50 to 1, with compliance with such covenant to be tested on the last day of each fiscal quarter.

The Credit Facility contains other customary covenants, including restrictions on liens, asset sales, acquisitions and debt permitted to be incurred by subsidiaries, and events of default. The remedies for events of default are customary for this type of credit facility. The Company was in compliance with all conditions and covenants as of March 31, 2009.

SPSS intends to fund its future capital needs through operating cash flows and cash and cash equivalents on hand. SPSS anticipates that these amounts will be sufficient to fund the Company’s operations and capital requirements at the current level of operations. However, no assurance can be given that changing business circumstances will not require additional capital for reasons that are not currently anticipated or that the necessary additional capital will then be available to SPSS on favorable terms or at all.

The Company’s cash and cash equivalents of $311.5 million as of March 31, 2009, were comprised of highly liquid investments with original maturity dates of three months or less. The Company places temporary cash investments with top-tier institutions of high credit quality. Additionally, the money market funds in which the Company invests are participants in the United States Treasury Department’s Temporary Guarantee Program for Money Market Funds. This program provides coverage for amounts held in money market funds as of the close of business on September 19, 2008. The program is designed to address temporary dislocations in credit markets. On March 31, 2009, the United States Treasury Department extended this program through September 18, 2009. As of March 31, 2009, the Company had $171.3 million of cash investments covered under the aforementioned program. Also, an additional $79.5 million of the Company’s cash and cash equivalents was covered by certain international government insurance programs.

CRITICAL ACCOUNTING POLICIES

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. As such, SPSS makes certain estimates, judgments and assumptions that it believes are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The Company’s critical accounting policies include revenue recognition, capitalization of software development costs, impairment of long-lived assets, impairment of goodwill and intangible assets, the estimation of credit losses on accounts receivable and the valuation of deferred tax assets. For a discussion of these critical accounting policies, see “Critical Accounting Policies and Estimates” in the SPSS Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on February 18, 2009.

RECENT ACCOUNTING PRONOUNCEMENTS

adopted FSP 157-2 and it did not have a material impact on its consolidated financial statements. In October 2008, the FASB issued FSP 157-3, “Determining the Fair Value of a Financial Asset in a Market That Is Not Active.” The FSP was effective upon issuance, including periods for which financial statements have not been issued. The FSP clarified the application of SFAS 157 in an inactive market and provided an illustrative example to demonstrate how the fair value of a financial asset is determined when the market for that financial asset is inactive. The adoption of this FSP FAS 157-3 did not have a material impact on the Company’s consolidated financial statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from fluctuations in interest rates on cash and cash equivalents. As of March 31, 2009, the Company had $311.5 million of cash and cash equivalents. A 100 basis point decrease in interest rates would result in $3.1 million of lower annual interest income, assuming the same level of cash and cash equivalents.

The Company is exposed to risk from fluctuations in foreign currency exchange rates. Since a substantial portion of the Company’s operations and revenue occur outside of the United States, and in currencies other than the U.S. dollar, the Company’s results can be significantly affected by changes in foreign currency exchange rates. Additionally, these changes can significantly affect intercompany balances that are denominated in different currencies. Were the foreign currency exchange rates to depreciate immediately and uniformly against the U.S. dollar by 10 percent from levels at March 31, 2009, the reported cash balance would decrease $11.9 million from a reported cash balance of $311.5 million at March 31, 2009.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures. SPSS maintains disclosure controls and procedures that have been designed to ensure that information related to the Company is recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive Officer and Chief Financial Officer, with the participation of the Company’s Disclosure Committee, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report, as required by Rule 13a-15 of the Securities Exchange Act of 1934. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

Changes in Internal Control Over Financial Reporting. There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Item 6. Exhibits


		Incorporation
Exhibit		by Reference
Number	Description of Document	(if applicable)

10.1	Form of Amended and Restated Change of Control Agreement.

10.2	Amended and Restated Employment Agreement, dated as of May 1, 2009, by and between SPSS Inc. and Jack Noonan.

10.3	Amended and Restated Employment Agreement, dated as of May 1, 2009, by and between SPSS Inc. and Raymond H. Panza.

31.1	Certification of the Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certification of the Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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


	SPSS Inc.
Date: May 6, 2009	By:	/s/ Jack Noonan
		Jack Noonan
		Chairman of the Board of Directors, Chief Executive Officer and President

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



Date: May 6, 2009	By:	/s/ Raymond H. Panza
		Raymond H. Panza
		Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary

SPSS INC.

EXHIBIT INDEX


EXHIBIT
NO.		DESCRIPTION

10.1		Form of Amended and Restated Change of Control Agreement

10.2		Amended and Restated Employment Agreement, dated as of May 1, 2009, by and between SPSS Inc. and Jack Noonan

10.3		Amended and Restated Employment Agreement, dated as of May 1, 2009, by and between SPSS Inc. and Raymond H. Panza

31.1		Certification of the Chief Executive Officer and President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer and President pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1 2 c50807exv10w1.htm EX-10.1 EX-10.1

Exhibit 10.1

AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT

This Amended and Restated Change of Control Agreement (this “Agreement”), dated as of , 2009 (the “Effective Date”), is by and between SPSS Inc., a Delaware corporation having its principal offices at 233 South Wacker Drive, Chicago, Illinois 60606 (“SPSS” or the “Company”), and , a senior management employee of SPSS (the “Employee”).

WHEREAS, the Company and the Employee are parties to that certain Change of Control Agreement dated , 2007 (the “Current Agreement”) and

WHEREAS, it is now desirable to amend the Current Agreement to reflect clarifying changes to conform to changes in the Company’s incentive plan and to make certain other technical and conforming changes;

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto mutually agree as follows:

1. Certain Defined Terms.

(a) The term “Change of Control,” as used herein, shall mean any one or more of the following:

	(i)		the accumulation, by any individual, entity or group (within the meaning of Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of thirty three percent (33%) or more of the then outstanding common stock of SPSS;

	(ii)		a merger or consolidation of SPSS in which SPSS does not survive as an independent public company;

	(iii)		a sale of all or substantially all of the assets of SPSS;

	(iv)		a triggering event under that certain Rights Agreement, dated as of June 18, 2008, between SPSS, Computershare Trust Company, N.A., as Rights Agent and Computershare Investor Services, L.L.C., as Transfer Agent, or any amendment, restatement or replacement thereof;

	(v)		a liquidation or dissolution of SPSS; or

	(vi)		a change in the composition of the Board of Directors of SPSS (the “Board”) not previously endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors, as a result of which fewer than a majority of the directors are Incumbent Directors (“Incumbent Directors” are directors who either (A) are directors of SPSS

as of the Effective Date, or (B) are nominated for election to the Board by the Nominating and Corporate Governance Committee and endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors).

Notwithstanding the foregoing, the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (I) any acquisitions of common stock or securities convertible into common stock directly from SPSS, or (II) any acquisition of common stock or securities convertible into common stock by any employee benefit plan (or related trust) sponsored or maintained by SPSS.

(b) “Constructive Termination,” as used herein, shall mean any of the following events:

(i) a material reduction in the Employee’s base compensation or annual incentive cash target as in effect immediately prior to the Employee’s termination of employment, which reduction occurs on or after the Change of Control Effective Date and prior to the second anniversary date of the Change of Control Effective Date; or

(ii) any action taken by the Company or the Surviving Entity (as defined herein) following a Change of Control, for a reason other than Good Cause, which results in a material diminution of the Employee’s job assignment, duties, responsibilities, or reporting relationships which is inconsistent with his position with SPSS as it existed immediately prior to the Change of Control Effective Date; or

(iii) a change in the Employee’s principal assigned location of employment by more than fifty (50) miles from the Employee’s principal assigned location of employment on the Effective Date (as the same may be changed prior to the Change in Control Effective Date with the Employee’s consent), which change in assigned location the Company has determined would constitute a material change in the geographic location at which the Employee is required to provide his duties.

The Employee’s termination of employment shall not be treated as a Constructive Termination unless (A) within ninety (90) days after the initial occurrence of the applicable event that is purported to give rise to a basis for a termination on account of Constructive Termination, the Employee provides written notice of the occurrence of such event to the Company (or the Surviving Entity), (B) such event is not cured within thirty (30) days after the date of the written notice from the Employee to the Company (or the Surviving Entity), and (C) the Employee terminates employment no later than sixty (60) days after the expiration of the applicable cure period. Notwithstanding the foregoing, if the event giving rise to a Constructive Termination occurs during the thirty (30) day period immediately preceding the second anniversary date of the Change of Control Effective Date and if the requirements set forth in the preceding sentence are otherwise satisfied, then the Employee’s termination of employment shall be treated as a Constructive Termination occurring prior to the such second anniversary even though the Employee’s actual termination of employment does not occur within the twenty four (24) months immediately following the Change of Control Effective Date.

(c) “Change of Control Effective Date,” as used herein, shall mean the date on which a Change of Control becomes effective.

(d) “Good Cause,” as used herein, shall mean:

(i) the Employee’s willful and continued failure to substantially perform his duties for the Company (other than any such failure resulting from the Employee’s disability) which is not cured within a reasonable period (not exceeding thirty (30) days) following the date on which the Company provides to the Employee written notice which specifies the event or behavior that forms the Company’s basis for a Good Cause termination;

(ii) the Employee’s willful engagement in conduct which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise;

(iii) the Employee’s engagement in fraud, theft or embezzlement;

(iv) the Employee’s conviction of, or the Employee’s entry of a plea of nolo contendre to, a felony (determined under applicable state law); or

(v) the Employee’s illegal use of a controlled substance.

For purposes of clauses (i) and (ii) above under this definition of Good Cause, no act, or failure to act, on the part of the Employee shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

(e) “Surviving Entity,” as used herein, shall mean (i) SPSS, or (ii) the entity surviving a transaction between SPSS and another company (with the term “company” to include but not be limited to any individual, group of individuals, partnership, corporation, or other similar entities) if SPSS does not survive the transaction.

2. Treatment of Stock Options, Restricted Stock Units, Restricted Stock and Stock Appreciation Rights upon Change of Control. In the event of a Change of Control (regardless of whether the Employee’s employment is terminated in connection with such Change of Control), the Employee shall be entitled to the following benefits (which benefits shall be distributed only in compliance with the terms of Section 5 hereof):

(a) all of the Employee’s outstanding stock options (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (i) shall accelerate and shall be deemed to be exercised in full upon the Change of Control Effective Date by means of a cashless exercise and (ii) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

(b) all of the Employee’s outstanding restricted stock units (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (i) shall accelerate and be deemed to be fully vested upon the Change of Control Effective Date and (ii) if applicable, with

regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

(c) all restrictions on transferability of outstanding restricted stock held by the Employee on the Change of Control Effective Date shall accelerate and shall be deemed to have terminated immediately prior to the Change of Control Effective Date, and, if applicable, such restricted stock shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control; and

(d) all of the Employee’s outstanding stock appreciation rights (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (i) shall accelerate and shall be deemed to be exercised in full upon the Change of Control Effective Date and the value thereof shall be exchanged for SPSS stock at the market value of such stock immediately prior to the Change of Control Effective Date and (ii) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control.

If any of the payments set forth above would be subject to section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), payments on the Change of Control Effective Date shall be permitted only if the Change of Control is a change in control event as defined in section 409A and applicable regulations issued thereunder and only if payments would be permitted to the Employee as a result of the change in control event as a service provider to the relevant corporation undergoing the applicable change in control event. If payments would not be permitted under the foregoing provisions, all vesting provisions and accelerated transfer provisions shall continue to apply but any payments will not be accelerated and shall instead be made as of the original payment date as determined under the applicable award.

3. Termination in Connection with a Change of Control. Subject to the provisions of Section 1(b), if, upon the Change of Control Effective Date or within twenty four (24) months after the Change of Control Effective Date, SPSS or the Surviving Entity terminates the Employee’s employment without Good Cause or the Employee terminates his employment in a manner that constitutes a Constructive Termination, the Employee shall be entitled to the following severance package (the “Severance Package”):

(a) a lump sum payment, to be paid by the Surviving Entity within thirty (30) days following the date on which the Employee’s employment is terminated, equal to the sum of:

(i) the greater of (A) the Employee’s base salary from SPSS for the full fiscal year immediately preceding the year in which the Change of Control Effective Date occurred or (B) the base salary to be received by the Employee for the then-current fiscal year, as approved by the Board, SPSS or the Surviving Entity, as the case may be; and

(ii) the quotient of (A) the aggregate incentive cash payments that the Employee received for the two (2) fiscal years of the Company ending immediately prior to the Employee’s termination date, divided by (B) two (2);

(b) for a period of eighteen (18) months following the date on which the Employee’s employment was terminated, at the cost of the Surviving Entity, the same health and welfare benefits that the Employee was receiving at the time the Employee’s employment was terminated; and

(c) professional outplacement services, but not to exceed a term of twelve (12) months, at a level customary for an executive, to be provided by a firm mutually acceptable to SPSS and the Employee.

Benefits provided pursuant to Section 3(b) shall be considered part of, and not in addition to, any benefits required to be provided to the Employee pursuant to COBRA or applicable state law. For purposes of calculating the payment to be made to the Employee pursuant to Section 3(a)(ii), the aggregate incentive cash payments for the two (2) fiscal years of the Company ending immediately prior to the Employee’s termination date shall be calculated by taking into account the incentive cash award that would have been awarded to the Employee for the full applicable fiscal period ending immediately prior to the Employee’s termination date had the Employee’s termination date not occurred prior to the date on which incentive cash awards were awarded to executives for that applicable fiscal period.

4. Non-Competition

(a) The Employee hereby covenants and agrees that, for a period of eighteen (18) months following the Employee’s termination of employment under circumstances which entitle the Employee to the Severance Package provided in Section 3 above, the Employee shall not (i) directly or indirectly (whether through a partnership of which the Employee is a partner or through any other individual or entity in which the Employee has any interest, legal or equitable), engage in any business competitive with the business of the Surviving Entity, (ii) directly or indirectly (whether through a partnership of which the Employee is a partner or through any other individual or entity in which the Employee has any interest, legal or equitable), solicit or otherwise engage with any customers or clients of the Surviving Entity, in any transactions which are competitive with the software business of the Surviving Entity which the Surviving Entity did engage or could have engaged in with those customers or clients, or (iii) directly or indirectly (whether through a partnership of which the Employee is a partner or through any other individual or entity in which the Employee has an interest, legal or equitable), assist any person in the development, programming, servicing, maintenance, manufacture, sale, licensing, distribution or marketing (including, without limitation, giving away software) of software and related products in competition with the Surviving Entity’s products, in each case in the United States of America or any country where the Surviving Entity, or its subsidiaries or affiliates, are doing business with respect to the Surviving Entity’s products and services, in each case excluding passive investment interests of less than two percent (2%) in corporations whose stock is registered under the Exchange Act.

(b) The Employee understands that a breach by him of this Section 4 may cause substantial injury to the Surviving Entity, which may be irreparable and/or in amounts difficult or impossible to ascertain, and that in the event the Employee breaches this Section 4, the Surviving Entity shall have, in addition to all other remedies available in the event of a breach of this Agreement, the right to injunctive or other equitable relief. Further, the Employee acknowledges and agrees that the restrictions and commitments set forth in this Agreement are necessary to protect the Surviving Entity’s legitimate interests and are reasonable in scope, area and time, and that if, despite this acknowledgement and agreement, at the time of the enforcement of any provision of this Agreement a court of competent jurisdiction shall hold that the period, area, or scope of such provision is unreasonable under the circumstances then existing, the maximum reasonable period, area, or scope under such circumstances shall be substituted for the period, area, or scope stated in such provision.

(c) Should the Employee breach this Section 4, any severance payments which have not yet been paid or have not yet otherwise been provided to the Employee shall not be paid or provided, and the Surviving Entity shall be entitled to pursue all other available legal or equitable remedies.

5. 409A Compliance. Notwithstanding any other provision of this Agreement to the contrary, if any payment hereunder is subject to section 409A and if such payment is to be paid on account of the Employee’s separation from service (within the meaning of section 409A of the Code) and if the Employee is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code), and if any payment is required to be made prior to the first day of the seventh month following the Employee’s separation from service, such payment shall be delayed until the first day of the seventh month following the Employee’s separation from service. To the extent that any payments or benefits under this Agreement are subject to section 409A of the Code and are paid or provided on account of the termination of the Employee’s employment, the determination as to whether the Employee has had a termination of employment shall be made in accordance with section 409A and the guidance issued thereunder.

6. Prior Agreements. SPSS and the Employee hereby agree that the terms of this Agreement shall supersede and replace the terms of any prior change of control agreement(s) or arrangement(s) between SPSS and the Employee, including the Current Agreement, and, upon execution of this Agreement, the terms of such prior change of control agreement(s) or arrangement(s), including the Current Agreement, shall no longer be in effect.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.


SPSS INC.
By:
	Name:	Jack Noonan
	Its:	President and Chief Executive Officer

EMPLOYEE

[Employee]

EX-10.2 3 c50807exv10w2.htm EX-10.2 EX-10.2

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”), dated as of May 1, 2009 (the “Effective Date”), is by and between SPSS Inc., a Delaware corporation having its principal offices at 233 South Wacker Drive, 11th Floor, Chicago, Illinois 60606 (“SPSS” or the “Company”), and Jack Noonan (the “Employee”).

WHEREAS, the Company and the Employee are parties to that certain Amended and Restated Employment Agreement dated December 17, 2007 (the “Current Agreement”); and

NOW THEREFORE, in consideration of the foregoing, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agrees as follows:

1. Employment. The Employee shall continue to be employed by SPSS as President and Chief Executive Officer for the Term of Employment (as defined in Section 4 below), and on the terms and conditions set out herein. In each of these capacities, the Employee shall report directly to the Board of Directors of SPSS (the “Board”).

2. Employment Services. The Employee shall be responsible for the management of all aspects of SPSS’s business and for carrying out corporate policy as established by the Board. Each of the senior executives of SPSS shall report to the Employee and the Employee shall be responsible for ensuring their full and faithful performance of the duties assigned to them by the Employee or the Board.

In addition, the Employee shall faithfully perform other executive and managerial duties, or special assignments, as may be delegated to the Employee by or on behalf of the Board. During the Term of Employment, the Employee shall work for SPSS and its Affiliates (as hereinafter defined) and shall devote substantially all of his business efforts and time to fulfill the duties of his employment.

For purposes of this Agreement, the term “Affiliate” as used herein shall mean SPSS, any other corporation owned or controlled by SPSS, directly or indirectly, and any subsidiary of SPSS.

3. Compensation.

(a) Base Salary. In consideration for aforementioned services and subject to the due performance thereof, the Employee shall receive an annual salary of $600,000 (payable semi-monthly in arrears) during the Term of Employment.

(b) Incentive Payments. The Employee shall be eligible to participate in the executive incentive cash compensation program for executive officers of SPSS (the “Incentive Plan”) and

to receive incentive cash payments in connection therewith. The Employee’s annual incentive target shall be no less than $700,000; provided, however, that the actual payout will depend upon SPSS company performance measured against defined metrics. Incentive cash payments shall be calculated and paid in accordance with the Incentive Plan; provided, however, that in no event shall the incentive cash payments for any portion of a year be paid later than two and one-half (2-1/2) months after the year in which they are earned.

(c) Reviews. The Employee shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) with regard to salary, bonus and incentive payments on no less frequent than an annual basis and/or in conjunction with the Compensation Committee’s review of the Company’s other executive officers. Any increase in salary or the award of a bonus or an incentive payment shall be made in the sole discretion of the Compensation Committee, taking into account, at the sole discretion of the Compensation Committee, whether the Employee has attained the applicable performance goals, financial and other, established for the Employee by the Compensation Committee or the Board.

(d) Equity Awards. The Employee shall, subject to the approval of the Compensation Committee, participate in the equity incentive program available to other executive officers of SPSS. For the avoidance of doubt, no equity awards will actually be issued to the Employee unless and until approval of the specific grant and issuance has been obtained from the Compensation Committee.

(e) Benefits. The Employee shall be entitled to:

	(i)		reimbursement from SPSS of reasonable and necessary business expenses incurred by the Employee in connection with his performance of services under this Agreement so long as such expenses are consistent with the Company’s expense reimbursement policy/practice (which is incorporated into this Agreement by reference), upon the Employee’s presentation from time to time of an itemized account of such expenses by the Employee; provided, however, that, the reimbursement of any such expenses that are taxable to the Employee shall be made on or before the last day of the year following the year in which the expense was incurred and the amount of the expenses eligible for reimbursement during one year will not affect the amount of expenses eligible for reimbursement in any other year;

	(ii)		five (5) weeks of paid vacation time during each year of employment;

	(iii)		ten (10) days of sick leave during each year of employment;

	(iv)		the holidays observed by SPSS in the United States; and

	(v)		receive, enjoy, and/or participate as applicable in the other benefits customarily received by executive officers and employees of SPSS; provided, however, that nothing herein shall require SPSS to maintain the benefits currently provided to SPSS employees.

4. Term of Employment. The Employee’s term of employment by SPSS (the “Term of Employment”) shall commence on the date hereof and shall continue through the Date of Termination as defined below. The date on which the Employee’s employment with the Company and its Affiliates terminates for any of the reasons set forth in Section 5 below (and the Agreement terminates as a result thereof) shall be referred to as the “Date of Termination.” Except as specifically agreed to in writing by the parties, all provisions of this Agreement shall remain in full force and effect during the entire Term of Employment.

5. Termination.

(a) The Term of Employment shall be terminated when the Employee’s employment with the Company and its Affiliates terminates for any of the following reasons:

	(i)		by mutual written agreement of SPSS and the Employee, effective as mutually agreed;

	(ii)		by SPSS with Good Cause (as defined hereunder), effective immediately (subject, if applicable, to the cure period provided under Section 5(b)(i));

	(iii)		by the Employee for Good Reason (as defined hereunder), effective as specified in an advance written notice by the Employee to the Company; provided, however, that the Employee’s termination shall not be treated as a termination by the Employee for Good Reason unless (A) within ninety (90) days after the initial existence of the applicable condition that is purported to give rise to a basis for a Good Reason termination, the Employee provides written notice of the existence of such condition to the Company, (B) such condition is not cured within thirty (30) days after the date of the written notice from the Employee to the Company, and (C) the Employee terminates employment no later than sixty (60) days after the expiration of the applicable cure period;

	(iv)		by SPSS without Good Cause, effective as specified in an advance written notice by the Company to the Employee but in no event later than sixty (60) days after the date of the written notice (the “SPSS Notice Period”);

	(v)		by the Employee without Good Reason, effective on the earlier of a mutually agreed Date of Termination or sixty (60) days after written notice to SPSS (the “Employee Notice Period”);

	(vi)		by reason of the Employee’s death;

	(vii)		by reason of the Employee’s Disability (as defined herein); or

	(viii)		by the Employee for any reason (or no reason) effective within the thirty (30) day period beginning on the first anniversary of the Change of Control Effective Date (the “Special Termination Provision”).

The SPSS Notice Period and the Employee Notice Period are collectively referred to herein as the “Notice Period”.

(b) For purposes of this Agreement, “Good Cause” is defined as:

	(i)		the Employee’s willful and continued failure to substantially perform his duties for the Company (other than any such failure resulting from the Employee’s Disability) which is not cured within a reasonable period (not exceeding thirty (30) days) following the date on which the Company provides to the Employee written notice which specifies the condition or behavior that forms the Company’s basis for a Good Cause termination pursuant to this Section 5(b)(i);

	(ii)		the Employee’s willful engagement in conduct which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise;

	(iii)		the Employee’s engagement in fraud, theft or embezzlement;

	(iv)		the Employee’s conviction of, or the Employee’s entry of a plea of nolo contendre to, a felony (determined under applicable state law); or

	(v)		the Employee’s illegal use of a controlled substance.

For purposes of Sections 5(b)(i) and (ii) above under this definition of Good Cause, no act, or failure to act, on the part of the Employee shall be deemed “willful” unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

	(i)		a material diminution of the Employee’s job assignment, duties, responsibilities or reporting relationships which is inconsistent with his initial position hereunder, or any later agreed-upon amendment of that position;

	(ii)		a material reduction in the Employee’s base compensation or annual incentive cash target as in effect immediately prior to the Date of Termination;

	(iii)		a material breach of the terms of this Agreement by SPSS; and

	(iv)		a change in the Employee’s principal assigned location of employment by more than fifty (50) miles from the Employee’s principal assigned location of employment on the Effective Date, which change in assigned location has been determined by the parties to constitute a material change

in the geographic location at which the Employee is required to provide his duties.

(d) For purposes of this Agreement, “Disability” means that the Employee has suffered a disability such that the Employee is physically or mentally unable to substantially perform the duties required of him under this Agreement for a period of six (6) consecutive months or more.

(e) If the Date of Termination occurs as a result of termination either by SPSS for Good Cause pursuant to Section 5(a)(ii) or by the Employee without Good Reason pursuant to Section 5(a)(v) above, SPSS will pay and/or provide (as applicable) the following to the Employee (except as otherwise provided in Section 7 of this Agreement):

	(i)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(ii)		any accrued, unpaid and unused vacation pay as of the Date of Termination; and

	(iii)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination.

All payments to be made pursuant to this Section 5(e) shall be paid within 15 days following the Date of Termination.

(f) If the Date of Termination occurs as a result of termination either by the Employee for Good Reason pursuant to Section 5(a)(iii) above or by SPSS without Good Cause pursuant to Section 5(a)(iv) above and if the Date of Termination does not occur under circumstances described in Section 5(h)(ii) hereof, SPSS will pay and/or provide (as applicable) the following to the Employee (except as otherwise provided in Section 7 of this Agreement):

	(i)		the full amount of the salary and benefits earned by the Employee during the Notice Period and unpaid as of the Date of Termination, if applicable;

	(ii)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(iii)		any accrued, unpaid and unused vacation pay as of the Date of Termination;

	(iv)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination;

	(v)		a lump sum cash payment equal to the sum of:

	(A)		eighteen (18) months of the Employee’s monthly base salary (annual base salary divided by twelve (12)) in effect at the Date of Termination; and

	(B)		the product of (I) one and one-half (1.5), multiplied by (II) the quotient of (x) the aggregate incentive cash payments that the Employee received for the two (2) fiscal years of the Company ending immediately prior to the Date of Termination (determined after giving effect to the provisions of Section 5(f)(ii)), divided by (y) two (2);

(vi)

to the extent the Employee was participating in the Company’s group health plans as of the Date of Termination:

	(A)		for the Employee and his dependents who were covered under the Company’s group health plans as of the Date of Termination, continuing coverage under the group health plans at the Company’s cost and on a non-taxable basis for twenty four (24) months following the Date of Termination; and

	(B)		for the Employee and his dependents who were covered under the Company’s group health plans throughout the twenty four (24) month period described in clause (A) above, continuing coverage under the group health plans at the Employee’s full cost (determined as the applicable premium charged for COBRA for the applicable level of coverage under the Company’s group health plan), for up to twenty four (24) months;

			provided, however, that the benefits described in clause (A) and/or (B) above shall terminate as of the first day on which the Employee becomes employed by another employer and becomes eligible for benefits (or, in the case of benefits under clause (B), if earlier, the date on which the Employee fails to pay the full cost of the benefits); all coverage under clauses (A) and (B) shall be considered part of, and not in addition to, any coverage required under COBRA (or applicable state law); and for periods after the termination of benefits due to other employment, the Employee (and his dependents) shall have the right to any remaining period of coverage under the Company’s group medical plans to the extent and in accordance with the terms of COBRA (or applicable state law);

	(vii)		in the event that the Date of Termination occurs before the date on which any outstanding equity awards (or portion thereof) previously granted by SPSS to the Employee would have otherwise vested (each, a “Vesting Date”), immediate vesting will occur with respect to all then yet unvested equity awards (or portions thereof) that would have vested had the Employee been employed with the Company as of the relevant Vesting Date and, to the extent applicable, all such equity awards shall be deemed

to be exercised in full upon the Date of Termination by means of a cashless exercise;

	(viii)		professional outplacement services, but not to exceed a term of twelve (12) months, at a level customary for an executive officer, to be provided by a firm mutually acceptable to SPSS and the Employee;

	(ix)		continuation of professional dues and subscriptions otherwise paid by SPSS prior to the Date of Termination for a period of eighteen (18) months following the Termination Date and, for a period of ninety (90) days following the Date of Termination, continued use of a mobile telephone provided for and paid by the Company, access to the Employee’s office telephone number and voice mailbox that exist at the Date of Termination, access to and use of the Employee’s personal Company email address and access to and use of the Employee’s personal Company electronic equipment including, without limitation, computer and wireless hand-held phone and email device; provided, however, that the aggregate value of the benefits provided under this Section 5(f)(ix) shall not exceed the applicable dollar limit under section 402(g)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), for the year in which the Date of Termination occurs; and

	(x)		acceptable employment references, as reasonably requested by the Employee, which employment references shall include information regarding the Employee’s dates of employment with SPSS, job title, pay rate and any such additional information as SPSS and the Employee may agree to at the time such references are requested and, for the avoidance of doubt, SPSS shall in all instances act in good faith to avoid negative comments regarding the Employee.

If the Date of Termination occurs pursuant to this Section 5(f) and, at such time, SPSS is unable to provide to the Employee the benefits set forth in Section 5(f)(vi) above, SPSS shall take all actions reasonably necessary to provide the Employee with the functional equivalent of the benefits set forth in Section 5(f)(vi). SPSS and the Employee agree and acknowledge that the “functional equivalent” of the benefits set forth in Section 5(f)(vi) may be provided in either of the following manners: (A) by SPSS’s benefits provider in accordance with the terms of SPSS’s employee benefit plans; or (B) by an agreed-upon lump-sum payment by SPSS to the Employee, which payment shall be intended to compensate the Employee for the benefits set forth in Section 5(f)(vi).

All payments to be made pursuant to this Section 5(f) shall be paid within fifteen (15) days following the Date of Termination.

(g) If the Date of Termination occurs due to the death of the Employee or the Disability of the Employee, SPSS will pay and/or provide (as applicable) the following to the Employee or, in the event of his death, his beneficiary (except as otherwise provided in Section 7 of this Agreement):

	(i)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(ii)		any accrued, unpaid and unused vacation pay as of the Date of Termination; and

	(iii)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination.

If the Employee has not designated a beneficiary (or the beneficiary does not survive the Employee), any payments on account of death will be paid to the estate of the Employee. All payments to be made pursuant to this Section 5(g) shall be paid within 15 days following the Date of Termination.

(h) The following shall apply in the event of a Change of Control:

(i)

As of the Change of Control Effective Date (as defined herein) and without regard to whether the Employee’s employment terminates as of the date of the Change of Control:

	(A)		all of the Employee’s outstanding stock options (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate and shall be deemed to be exercised in full upon the Change of Control Effective Date by means of a cashless exercise and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

	(B)		all of the Employee’s outstanding restricted stock units (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate and be deemed to be fully vested upon the Change of Control Effective Date and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

	(C)		all restrictions on transferability of outstanding restricted stock held by the Employee on the Change of Control Effective Date shall accelerate and shall be deemed to have terminated immediately prior to the Change of Control Effective Date, and, if applicable, such restricted stock shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the

			shareholders generally in connection with the Change of Control; and

	(D)		all of the Employee’s outstanding stock appreciation rights (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate, shall be deemed to be exercised in full upon the Change of Control Effective Date and the value thereof shall be exchanged for SPSS stock at the market value of such stock immediately prior to the Change of Control Effective Date and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control.

			If any of the payments set forth in this Section 5(h)(i) would be subject to section 409A of the Code, payments on the Change of Control Effective Date shall be permitted only if the Change of Control is a change in control event as defined in section 409A and applicable regulations issued thereunder and only if payments would be permitted to the Employee as a result of the change in control event as a service provider to the relevant corporation undergoing the applicable change in control event. If payments would not be permitted under the foregoing provisions, all vesting provisions and accelerated transfer provisions shall continue to apply but any payments will not be accelerated and shall instead be made as of the original payment date as determined under the applicable award.

	(ii)		If the Date of Termination occurs (y) either by the Employee for Good Reason pursuant to Section 5(a)(iii) above or by SPSS without Good Cause pursuant to Section 5(a)(iv) above and if the Date of Termination occurs on or within two (2) years following the Change of Control Effective Date, or (z) by the Employee pursuant to the Special Termination Provision of Section 5(a)(viii) above, SPSS will pay and/or provide (as applicable) to the Employee (except as otherwise provided in Section 7 of this Agreement) the payments and benefits described in Section 5(f); provided, however, that the Employee shall not be entitled to the payment described in Section 5(f)(v) but shall instead be entitled to a lump sum cash payment equal to the sum of:

	(A)		thirty (30) months of the Employee’s monthly base salary (annual base salary divided by twelve (12)) in effect at the Date of Termination; and

	(B)		the product of (I) two and one-half (2.5), multiplied by (II) the quotient of (x) the aggregate incentive cash payments that the Employee received for the two (2) fiscal years of the Company ending immediately prior to the Date of Termination (determined

after giving effect to the provisions of Section 5(f)(ii)), divided by (y) two (2).

			For purposes of this Section 5(h)(ii), if the event constituting Good Reason occurs during the thirty (30) day period immediately preceding the second anniversary of the Change of Control Effective Date and if the requirements set forth in Section 5(a)(iii) are otherwise satisfied, then the Date of Termination shall be treated as a termination by the Employee for Good Reason within two (2) years following the Change of Control Effective Date even though the actual Date of Termination does not occur within two (2) years following the Change of Control Effective Date.

	(iii)		For purposes of this Agreement, the term “Change of Control” shall mean any one or more of the following:

	(A)		the accumulation, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of thirty three percent (33%) or more of the then outstanding common stock of SPSS;

	(B)		a merger or consolidation of SPSS in which SPSS does not survive as an independent public company;

	(C)		a sale of all or substantially all of the assets of SPSS;

	(D)		a triggering event under that certain Rights Agreement, dated as of June 18, 2008, between SPSS, Computershare Trust Company, N.A., as Rights Agent and Computershare Investor Services, L.L.C., as Transfer Agent, or any amendment, restatement or replacement thereof;

	(E)		a liquidation or dissolution of SPSS; or

	(F)		a change in the composition of the Board not previously endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors, as a result of which fewer than a majority of the directors are Incumbent Directors (“Incumbent Directors” are directors who either (I) are directors of SPSS as of the Effective Date, or (II) are nominated for election to the Board by the Nominating and Corporate Governance Committee and endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors).

SPSS. The term “Change of Control Effective Date,” as used herein in connection with a Change of Control, shall mean the date on which a Change of Control becomes effective.

(i) Notwithstanding any other provision of this Agreement to the contrary, if any payment hereunder is subject to section 409A and if such payment is to be paid on account of the Employee’s separation from service (within the meaning of section 409A of the Code), if the Employee is a specified employee (within the meaning of section 409A(a)(2)(B) of the Code), and if any such payment is required to be made prior to the first day of the seventh month following the Employee’s separation from service, such payment shall be delayed until the first day of the seventh month following the Employee’s separation from service. To the extent that any payments or benefits under this Agreement are subject to section 409A of the Code and are paid or provided on account of the termination of the Term of Employment, the determination as to whether the Employee has had a termination of employment (or separation from service) shall be made in accordance with section 409A and the guidance issued thereunder.

(j) For purposes of this Section 5, an “earned” incentive cash award for any applicable fiscal period shall mean the incentive cash award that would have been awarded to the Employee for the full applicable fiscal period ending immediately prior to the Date of Termination had the Date of Termination not occurred pursuant to this Section 5 prior to the date on which incentive cash awards were awarded to other executive officers for that applicable fiscal period.

6. Effect of Termination. In the event the Date of Termination occurs pursuant to Section 5, the Employee shall tender his resignation to the board of directors of SPSS and any Affiliate of SPSS on which he may then be serving. Following the Date of Termination pursuant to Section 5, the rights provided for in connection with such termination pursuant to Section 5 hereof, and Sections 7 through 17 of this Agreement, shall continue in accordance with the terms and conditions of each respective Section.

7. Offsets. Except with respect to any payments that are subject to section 409A of the Code, SPSS shall be entitled to withhold any amounts from any payments required to be made to the Employee herein, including without limitation, amounts due in respect of any SPSS capital stock, tax withholdings, and any amounts that the Employee owes to SPSS.

8. Tax Gross-Up.

(a) If any payment or benefit to which the Employee is entitled under this Agreement or otherwise from SPSS or any of its affiliates constitutes a “parachute payment” within the meaning of section 280G of the Code and if, as a result thereof, the Employee is subject to a tax under section 4999 of the Code (an “Excise Tax”), SPSS shall pay to the Employee an additional amount (the “Make-Whole Payment”) which shall be equal to the sum of (i) the amount of the Excise Tax, plus (ii) all income, excise and other applicable taxes imposed on the Employee under the laws of any Federal, state or local government or taxing authority by reason of the payments required under Sections 8(a)(i) and 8(a)(ii). The Make-Whole Payment shall be paid within 15 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes but in no event later than the last day of the calendar year following the year in which the

Employee remits the applicable taxes. The determination of whether the Employee is entitled to a Make-Whole Payment pursuant to this Section 8 and the amount thereof shall be made by an accounting firm selected by SPSS and the determination of such accounting firm shall be final and binding upon both SPSS and the Employee.

(b) The Employee shall notify SPSS in writing of any claim by the Internal Revenue Service that, if successful, would result in an Excise Tax that would otherwise have required a Make-Whole Payment pursuant to Section 8(a). Such notification shall be given as soon as practicable but no later than ten business days after the Employee is informed in writing of such claim and shall apprise SPSS of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such Excise Tax prior to the expiration of the thirty (30) day period following the date on which he gives such notice to SPSS (or such shorter period ending on the date that any payment of the Excise Tax is due) (the “Consideration Period”). SPSS may take either of the following actions with respect to the claim:

	(i)		If SPSS does not desire to contest the claim, SPSS shall notify the Employee in writing and shall pay to the Employee a Make-Whole Payment, which Make-Whole Payment shall be paid within 15 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the calendar year following the year in which the Employee remits the applicable taxes.

	(ii)		If SPSS desires to contest the claim, SPSS shall inform the Employee in writing prior to the end of the Consideration Period that it desires to contest such claim and the Employee shall:

	(A)		give SPSS any information requested by SPSS relating to such claim;

	(B)		take such action in connection with contesting such claim as SPSS shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by SPSS;

	(C)		cooperate with SPSS in good faith in order to effectively contest such claim; and

	(D)		permit SPSS to participate in any proceedings relating to such claim;

provided, however, that SPSS shall bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest. If SPSS does not prevail in its contest of the claim (whether as a result of settlement or otherwise) such that the Employee is required to pay an Excise Tax, SPSS shall pay to the Employee a Make-Whole Payment, which Make-Whole Payment shall be paid within 5 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the calendar year following

the year in which the Employee remits the applicable taxes.

9. Director and Officer Insurance. SPSS agrees that it shall indemnify the Employee against any actual or threatened actions or proceedings brought against the Employee by reason of the fact that he is or was an employee, officer, consultant or agent of the Company, as and to the extent specified in that certain Indemnification Agreement between the Company and the Employee dated May 21, 2007. The Employee shall be covered by the director and officer insurance policies maintained by the Company, and the Company shall make special arrangements, if necessary, to continue to provide insurance coverage to the Employee following the Date of Termination, unless the Date of Termination occurs for Good Cause pursuant to Section 5(a)(ii) hereof.

10. Non-Competition; Confidentiality; Work for Hire.

(a) The Employee understands that the Company’s business concerns proprietary computer programs and related documentation (software) which includes, but is not limited to, the SPSS mainframe/mini software product line and the SPSS micro/PC software product line. The Employee understands that in the course of his employment with SPSS, SPSS and/or its Affiliates may provide the Employee with, or access to, such software (including, without limitation, source listings therefor), as well as confidential and/or proprietary prospect and customer lists, data, research, specifications, memoranda, files, records, plans, concepts, flow charts, drawings, designs, descriptions, formulations, trade secrets and other confidential and/or proprietary information and property, including but not limited to, information regarding SPSS operations, businesses, affairs, management and market structure (all of the foregoing collectively referred to as the “Confidential Property”).

(b) The Employee acknowledges and agrees that the Confidential Property, and all information and intellectual property and other data which the Employee develops in connection with his employment duties, is the sole and exclusive property of SPSS and is not available to any third parties.

(c) The Employee will regard and preserve as confidential and as trade secrets all the Confidential Property. During the Employee’s employment and thereafter, the Employee will not, directly or indirectly, communicate or divulge to, or use for the benefit of himself or any other person, firm, association, corporation, or other entity without the prior written consent of SPSS, any Confidential Property. The Confidential Property shall remain the sole and exclusive property of SPSS, and upon any expiration or termination of the Term of Employment for any reason whatsoever, the Employee shall promptly return any and all Confidential Property in his possession or control to SPSS.

(d) The Employee shall have no right, title or interest of any kind or nature in any of the Confidential Property or any proceeds therefrom. With respect to any Confidential Property which the Employee has developed or develops (either alone or with others) during his employment with SPSS, the Employee agrees:

(i)

to disclose the same promptly to an officer of SPSS;

	(ii)		to grant and assign to SPSS, without additional payment or consideration of any kind, all of the Employee’s rights, titles and interests therein, as directed by SPSS;

	(iii)		to execute any applications, assignments and other instruments in writing that SPSS may prepare, at the Company’s expense, to apply for, obtain or maintain, solely for the benefit of SPSS, any patents or proprietary interests therein, in the United States and any and all foreign countries; and

	(iv)		to provide any and all assistance as SPSS may request, at the Company’s expense, in the prosecution of such applications, in the prosecution or defense of any patent interferences, and in any and all litigation in which SPSS may be involved relating to the same.

The above shall not apply to the Employee’s general skills and knowledge nor to enhancement of the employee’s general skills and knowledge as a result of his employment, nor shall the above apply to protectible information which is or becomes in the public domain through no fault of the Employee or protectible information which bears no reasonable relation to the software business of SPSS as described in Section 10(a).

(e) The Employee further recognizes and agrees that:

	(i)		SPSS licenses the use of various computer software (“Licensed Software”) from a variety of outside companies. SPSS does not own the Licensed Software or its related documentation and, unless authorized by the licensor, does not have the right to reproduce it;

	(ii)		The Employee will use Licensed Software only in accordance with the terms of the applicable license agreement;

	(iii)		If the Employee learns of any misuse of Licensed Software or related documentation within SPSS, he shall notify the appropriate party at SPSS of the misuse;

	(iv)		SPSS employees caught making, acquiring or using unauthorized copies of Licensed Software will be disciplined as appropriate under the circumstances; and

	(v)		According to the U.S. Copyright Law, illegal reproduction of copyrighted Licensed Software can be subjected to various substantial civil damages and/or criminal penalties, including fines and imprisonment. Other Licensed Software may be covered by trade secret/confidentiality agreements which are protected under state laws.

(f) The Employee hereby further covenants and agrees that, during the period of his employment with SPSS, and during the Agreed Period (as hereinafter defined), the Employee

shall not (i) be engaged or involved in any manner in Prohibited Activities (as hereinafter defined) in any Prohibited Territory (as hereinafter defined) or (ii) solicit or otherwise engage with (except pursuant to the Employee’s employment with SPSS) any customers or clients of SPSS existing on the date of such termination of the Employee’s employment with SPSS, in any transactions which are in direct competition with the statistical data analysis software business of SPSS which SPSS did or could have engaged in with those customers or clients at any time during the Employee’s employment with SPSS. For purposes of this Section 10, (i) “Prohibited Activities” shall mean any development, sales, marketing, licensing and/or distribution of any statistical data analysis software which is directly competitive with any products being marketed by SPSS or any of its Affiliates as of the date of reference, and (ii) “Prohibited Territory” means the United States, Europe and/or any other country or applicable geographic area where SPSS or its Affiliates are engaging, as of the date of reference, in the marketing of any products. The term “Agreed Period” shall mean a period of eighteen (18) months after the date of any expiration or termination of the Term of Employment; provided, however, that if the Employee intends to accept, and actually accepts, employment with a business entity that has its principal place of business and headquarters in Europe, and the Employee’s place of work for such entity shall be within Europe, then, with respect to Prohibited Activities in Europe and solicitation of SPSS customers located in Europe, the Agreed Period shall be a period of six (6) months after the date of any expiration or termination of the Term of Employment.

If SPSS is sold or merged into another company or other business entity, or otherwise ceases to exist for any reason, and this Agreement is not guaranteed or assumed in full by the company or other business entity to which SPSS is sold or into which SPSS is merged into (including an assumption by operation of law), or the Employee is not offered a comparable position to the position then held by the Employee at SPSS in lieu of the assumption of this Agreement, which position is accepted by the Employee, the provisions of this Section 10(f) shall terminate effective upon the occurrence of the events described in this sentence. Notwithstanding the foregoing, in the event of a Change of Control (as defined in Section 5(h)) and subsequent termination of the Employee’s employment for any reason within twelve (12) months after the Change of Control Effective Date, the provisions of this Section 10(f) shall terminate upon the Date of Termination.

(g) SPSS encourages its employees to author and publish papers and articles related to their lines of work with SPSS. However, the Employee acknowledges that SPSS reserves the right to approve such material prior to publishing and, if necessary, to delete any portion that SPSS does not wish to disclose to others outside of SPSS.

(h) During the Agreed Period, the Employee will not directly or indirectly employ, solicit for employment, or advise or recommend to any other person that they employ or solicit for employment, any employee of SPSS or any Affiliate.

(i) During the Agreed Period, the Employee will not directly or indirectly hire, engage, send any work to, place orders with, or in any manner be associated with any supplier, contractor, subcontractor or other person or firm which rendered manufacturing or other services, or sold any products, to SPSS or any Affiliate if such action by the Employee would have a material adverse effect on the business, assets or financial condition of SPSS or any Affiliate.

(j) The Employee understands that a breach by him of any provision of this Agreement may cause substantial injury to SPSS which may be irreparable and/or in amounts difficult or impossible to ascertain, and that in the event the Employee breaches any provision of this Agreement, SPSS shall have, in addition to all other remedies available in the event of a breach of this Agreement, the right to injunctive or other equitable relief. Further, the Employee acknowledges and agrees that the restrictions and commitments set forth in this Agreement are necessary to protect the Company’s legitimate interests and are reasonable in scope, area and time, and that if, despite this acknowledgment and agreement, at the time of the enforcement of any provision of this Agreement a court of competent jurisdiction shall hold that the period, area or scope of such provision is unreasonable under the circumstances then existing, the maximum reasonable period, area or scope under such circumstances shall be substituted for the period, area or scope stated in such provision.

In connection with the foregoing provisions of this Section 10, the Employee represents that the Employee’s experience, capabilities and circumstances are such that such provisions will not prevent the Employee from earning a livelihood. The Employee further agrees that the limitations set forth in this Section 10 (including, without limitation, any time or territorial limitations) are reasonable and properly required for the adequate protection of the business of SPSS (and its Affiliates). In the event any such territorial or time limitation is deemed to be unreasonable by a court of competent jurisdiction, the Employee agrees to the reduction of the territorial or time limitation to the area or period which such court shall have deemed reasonable.

It is understood and agreed that the covenants made by the Employee in this Section 10 shall survive the expiration or termination of this Agreement.

11. Non-Waiver of Rights. The failure to enforce at any time any of the provisions of this Agreement or to require at any time performance by the other party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement, or any part hereof, or the right of either party thereafter to enforce each and every provision in accordance with the terms of this Agreement.

12. Arbitration. Any dispute as to any claim under this Agreement shall be settled by arbitration in Chicago, Illinois by a panel of three arbitrators, who shall be appointed pursuant to the rules of the American Arbitration Association. The arbitration shall be conducted promptly and expeditiously in accordance with the applicable arbitration rules of the American Arbitration Association. Any award issued as a result of such arbitration shall be final and binding on the parties, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

13. Severability. Whenever there may be a conflict between the provisions of this Agreement and any statute, prevailing law, ordinance or regulation, the latter shall prevail, but in such event the provisions of this Agreement so affected shall be construed and limited only to the extent necessary to bring it within the requirements of such statute, law, ordinance or regulation and in no event shall such illegality or unenforceability affect the remaining provisions or remaining portions of this Agreement.

14. Notices. Any notice given by either party hereunder shall be in writing and shall be personally delivered or shall be mailed, certified or registered mail, postage prepaid, as follows:


		To SPSS:		SPSS Inc. 233 South Wacker Drive 11th Floor Chicago, Illinois 60606 Attention: Board of Directors

		With a copy to:		Frederick B. Thomas Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606

		To the Employee:		At the address of the Employee as set forth on the payroll records of SPSS.

or to such other address as may have been furnished to the other party by written notice.

15. Assignment. The rights and obligations of SPSS under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of SPSS.

16. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes the Current Agreement and all other prior agreements and representations, written or oral, relating to employment or compensation, including any agreements evidencing equity-based compensation (“Equity Agreements”) to the extent that this Agreement is inconsistent with such Equity Agreements. No representations or agreements, written or oral, other than those representations and agreements contained in this Agreement, have been made to or in favor of the Employee. This Agreement may not be waived, changed, modified, extended or discharged 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.

17. Applicable Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Illinois, without regard to its conflicts of law doctrine, and the Employee hereby consents to personal jurisdiction in Illinois with regard to any dispute arising between the parties hereto.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.


SPSS Inc.
By:	/s/ Raymond H. Panza
	Name:	Raymond H. Panza
	Its:	Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary

Employee
/s/ Jack Noonan
Jack Noonan

EX-10.3 4 c50807exv10w3.htm EX-10.3 EX-10.3

Exhibit 10.3

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

WHEREAS, the Company and the Employee are parties to that certain Amended and Restated Employment Agreement dated December 17, 2007 (the “Current Agreement”); and

1. Employment. The Employee shall continue to be employed by SPSS as Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary for the Term of Employment (as defined in Section 4 below), and on the terms and conditions set out herein. In each of these capacities, the Employee shall report directly to the President and Chief Executive Officer of SPSS.

2. Employment Services. The Employee shall be responsible for the management and direction of all aspects of the Company’s financing, accounting, financial reporting and financial information systems for carrying out corporate policy as established by the Board of Directors of SPSS (the “Board”). These duties shall include, but not be limited to, oversight and management of financial and strategic planning, budgeting and forecasting; compliance with all applicable accounting, securities and other government regulations; initiating internal audits and financial controls; establishing and managing credit; establishment and maintenance of receivable and payable systems; and development and maintenance of internal systems to track, analyze and control costs related to the business of SPSS.

The Employee shall also be responsible for the management and direction of all aspects of the Company’s legal department, the corporate secretary function, human resources, information technology and the Company’s corporate administration, including without limitation, its facilities, risk management department; and product fulfillment department.

In addition, the Employee shall faithfully perform other executive and managerial duties, or special assignments, as may be delegated to the Employee by or on behalf of the Board, the Audit Committee or the Chief Executive Officer of SPSS. During the Term of Employment, the Employee shall work for SPSS and its Affiliates (as hereinafter defined) and shall devote substantially all of his business efforts and time to fulfill the duties of his employment.

For purposes of this Agreement, the term “Affiliate” as used herein shall mean SPSS, any other corporation owned or controlled by SPSS, directly or indirectly, and any subsidiary of SPSS.

3. Compensation.

(a) Base Salary. In consideration for aforementioned services and subject to the due performance thereof, the Employee shall receive an annual salary of $440,000 (payable semi-monthly in arrears) during the Term of Employment.

(b) Incentive Payments. The Employee shall be eligible to participate in the executive incentive cash compensation program for executive officers of SPSS (the “Incentive Plan”) and to receive incentive cash payments in connection therewith. The Employee’s annual incentive target shall be no less than the greater of $300,000 or 40% of his base pay; provided, however, that the actual payout will depend upon SPSS company performance measured against defined metrics. Incentive cash payments shall be calculated and paid in accordance with the Incentive Plan; provided, however, that in no event shall the incentive cash payments for any portion of a year be paid later than two and one-half (2-1/2) months after the year in which they are earned.

(c) Reviews. The Employee shall be reviewed by the Compensation Committee of the Board (the “Compensation Committee”) with regard to salary, bonus and incentive payments on no less frequent than an annual basis and/or in conjunction with the Compensation Committee’s review of the Company’s Chief Executive Officer and/or other executive officers. Any increase in salary or the award of a bonus or an incentive payment shall be made in the sole discretion of the Compensation Committee, taking into account, at the sole discretion of the Compensation Committee, whether the Employee has attained the applicable performance goals, financial and other, established for the Employee by the Compensation Committee or the Board.

(e) Benefits. The Employee shall be entitled to:

(i)

reimbursement from SPSS of reasonable and necessary business expenses incurred by the Employee in connection with his performance of services under this Agreement so long as such expenses are consistent with the Company’s expense reimbursement policy/practice (which is incorporated into this Agreement by reference), upon the Employee’s presentation from time to time of an itemized account of such expenses by the Employee; provided, however, that, the reimbursement of any such expenses that are taxable to the Employee shall be made on or before the last day of the year following the year in which the expense was incurred and the amount of

the expenses eligible for reimbursement during one year will not affect the amount of expenses eligible for reimbursement in any other year;

	(ii)		five (5) weeks of paid vacation time during each year of employment;

	(iii)		ten (10) days of sick leave during each year of employment;

	(iv)		the holidays observed by SPSS in the United States; and

	(v)		receive, enjoy, and/or participate as applicable in the other benefits customarily received by executive officers and employees of SPSS; provided, however, that nothing herein shall require SPSS to maintain the benefits currently provided to SPSS employees.

5. Termination.

(a) The Term of Employment shall be terminated when the Employee’s employment with the Company and its Affiliates terminates for any of the following reasons:

	(i)		by mutual written agreement of SPSS and the Employee, effective as mutually agreed;

	(ii)		by SPSS with Good Cause (as defined hereunder), effective immediately (subject, if applicable, to the cure period provided under Section 5(b)(i));

	(iii)		by the Employee for Good Reason (as defined hereunder), effective as specified in an advance written notice by the Employee to the Company; provided, however, that the Employee’s termination shall not be treated as a termination by the Employee for Good Reason unless (A) within ninety (90) days after the initial existence of the applicable condition that is purported to give rise to a basis for a Good Reason termination, the Employee provides written notice of the existence of such condition to the Company, (B) such condition is not cured within thirty (30) days after the date of the written notice from the Employee to the Company, and (C) the Employee terminates employment no later than sixty (60) days after the expiration of the applicable cure period;

	(iv)		by SPSS without Good Cause, effective as specified in an advance written notice by the Company to the Employee but in no event later than sixty (60) days after the date of the written notice (the “SPSS Notice Period”);

	(v)		by the Employee without Good Reason, effective on the earlier of a mutually agreed Date of Termination or sixty (60) days after written notice to SPSS (the “Employee Notice Period”);

	(vi)		by reason of the Employee’s death;

	(vii)		by reason of the Employee’s Disability (as defined herein); or

	(viii)		by the Employee for any reason (or no reason) effective within the thirty (30) day period beginning on the first anniversary of the Change of Control Effective Date (the “Special Termination Provision”).

The SPSS Notice Period and the Employee Notice Period are collectively referred to herein as the “Notice Period”.

(b) For purposes of this Agreement, “Good Cause” is defined as:

	(i)		the Employee’s willful and continued failure to substantially perform his duties for the Company (other than any such failure resulting from the Employee’s Disability) which is not cured within a reasonable period (not exceeding thirty (30) days) following the date on which the Company provides to the Employee written notice which specifies the condition or behavior that forms the Company’s basis for a Good Cause termination pursuant to this Section 5(b)(i);

	(ii)		the Employee’s willful engagement in conduct which is demonstrably and materially injurious to the Company or its reputation, monetarily or otherwise;

	(iii)		the Employee’s engagement in fraud, theft or embezzlement;

	(iv)		the Employee’s conviction of, or the Employee’s entry of a plea of nolo contendre to, a felony (determined under applicable state law); or

	(v)		the Employee’s illegal use of a controlled substance.

	(i)		a material diminution of the Employee’s job assignment, duties, responsibilities or reporting relationships which is inconsistent with his initial position hereunder, or any later agreed-upon amendment of that position;

	(ii)		a material reduction in the Employee’s base compensation or annual incentive cash target as in effect immediately prior to the Date of Termination;

	(iii)		a material breach of the terms of this Agreement by SPSS; and

	(iv)		a change in the Employee’s principal assigned location of employment by more than fifty (50) miles from the Employee’s principal assigned location of employment on the Effective Date, which change in assigned location has been determined by the parties to constitute a material change in the geographic location at which the Employee is required to provide his duties.

	(i)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(ii)		any accrued, unpaid and unused vacation pay as of the Date of Termination; and

	(iii)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination.

All payments to be made pursuant to this Section 5(e) shall be paid within 15 days following the Date of Termination.

	(i)		the full amount of the salary and benefits earned by the Employee during the Notice Period and unpaid as of the Date of Termination, if applicable;

	(ii)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(iii)		any accrued, unpaid and unused vacation pay as of the Date of Termination;

	(iv)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination;

	(v)		a lump sum cash payment equal to the sum of:

	(A)		eighteen (18) months of the Employee’s monthly base salary (annual base salary divided by twelve (12)) in effect at the Date of Termination; and

	(B)		the product of (I) one and one-half (1.5), multiplied by (II) the quotient of (x) the aggregate incentive cash payments that the Employee received for the two (2) fiscal years of the Company ending immediately prior to the Date of Termination (determined after giving effect to the provisions of Section 5(f)(ii)), divided by (y) two (2);

(vi)

to the extent the Employee was participating in the Company’s group health plans as of the Date of Termination:

	(A)		for the Employee and his dependents who were covered under the Company’s group health plans as of the Date of Termination, continuing coverage under the group health plans at the Company’s cost and on a non-taxable basis for twenty four (24) months following the Date of Termination; and

	(B)		for the Employee and his dependents who were covered under the Company’s group health plans throughout the twenty four (24) month period described in clause (A) above, continuing coverage under the group health plans at the Employee’s full cost (determined as the applicable premium charged for COBRA for the applicable level of coverage under the Company’s group health plan), for up to twenty four (24) months;

provided, however, that the benefits described in clause (A) and/or (B) above shall terminate as of the first day on which the Employee becomes employed by another employer and becomes eligible for benefits (or, in the case of benefits under clause (B), if earlier, the date on which the Employee fails to pay the full cost of the benefits); all coverage under

clauses (A) and (B) shall be considered part of, and not in addition to, any coverage required under COBRA (or applicable state law); and for periods after the termination of benefits due to other employment, the Employee (and his dependents) shall have the right to any remaining period of coverage under the Company’s group medical plans to the extent and in accordance with the terms of COBRA (or applicable state law);

	(vii)		in the event that the Date of Termination occurs before the date on which any outstanding equity awards (or portion thereof) previously granted by SPSS to the Employee would have otherwise vested (each, a “Vesting Date”), immediate vesting will occur with respect to all then yet unvested equity awards (or portions thereof) that would have vested had the Employee been employed with the Company as of the relevant Vesting Date and, to the extent applicable, all such equity awards shall be deemed to be exercised in full upon the Date of Termination by means of a cashless exercise;

	(viii)		professional outplacement services, but not to exceed a term of twelve (12) months, at a level customary for an executive officer, to be provided by a firm mutually acceptable to SPSS and the Employee;

	(ix)		continuation of professional dues and subscriptions otherwise paid by SPSS prior to the Date of Termination for a period of eighteen (18) months following the Termination Date and, for a period of ninety (90) days following the Date of Termination, continued use of a mobile telephone provided for and paid by the Company, access to the Employee’s office telephone number and voice mailbox that exist at the Date of Termination, access to and use of the Employee’s personal Company email address and access to and use of the Employee’s personal Company electronic equipment including, without limitation, computer and wireless hand-held phone and email device; provided, however, that the aggregate value of the benefits provided under this Section 5(f)(ix) shall not exceed the applicable dollar limit under section 402(g)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), for the year in which the Date of Termination occurs; and

	(x)		acceptable employment references, as reasonably requested by the Employee, which employment references shall include information regarding the Employee’s dates of employment with SPSS, job title, pay rate and any such additional information as SPSS and the Employee may agree to at the time such references are requested and, for the avoidance of doubt, SPSS shall in all instances act in good faith to avoid negative comments regarding the Employee.

If the Date of Termination occurs pursuant to this Section 5(f) and, at such time, SPSS is unable to provide to the Employee the benefits set forth in Section 5(f)(vi) above, SPSS shall

take all actions reasonably necessary to provide the Employee with the functional equivalent of the benefits set forth in Section 5(f)(vi). SPSS and the Employee agree and acknowledge that the “functional equivalent” of the benefits set forth in Section 5(f)(vi) may be provided in either of the following manners: (A) by SPSS’s benefits provider in accordance with the terms of SPSS’s employee benefit plans; or (B) by an agreed-upon lump-sum payment by SPSS to the Employee, which payment shall be intended to compensate the Employee for the benefits set forth in Section 5(f)(vi).

All payments to be made pursuant to this Section 5(f) shall be paid within fifteen (15) days following the Date of Termination.

	(i)		any earned but unpaid base salary, any other earned but unpaid compensation plus any earned (as described in Section 5(j) below) but unpaid incentive cash award as of the Date of Termination;

	(ii)		any accrued, unpaid and unused vacation pay as of the Date of Termination; and

	(iii)		reimbursement of any business expenses properly incurred by the Employee pursuant to Section 3(e)(i) above and unreimbursed as of the Date of Termination.

(h) The following shall apply in the event of a Change of Control:

(i)

As of the Change of Control Effective Date (as defined herein) and without regard to whether the Employee’s employment terminates as of the date of the Change of Control:

(A)

all of the Employee’s outstanding stock options (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate and shall be deemed to be exercised in full upon the Change of Control Effective Date by means of a cashless exercise and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

	(B)		all of the Employee’s outstanding restricted stock units (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate and be deemed to be fully vested upon the Change of Control Effective Date and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control;

	(C)		all restrictions on transferability of outstanding restricted stock held by the Employee on the Change of Control Effective Date shall accelerate and shall be deemed to have terminated immediately prior to the Change of Control Effective Date, and, if applicable, such restricted stock shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control; and

	(D)		all of the Employee’s outstanding stock appreciation rights (vested and unvested) granted by SPSS prior to the Change of Control Effective Date (I) shall accelerate, shall be deemed to be exercised in full upon the Change of Control Effective Date and the value thereof shall be exchanged for SPSS stock at the market value of such stock immediately prior to the Change of Control Effective Date and (II) if applicable, with regard to the underlying stock, shall be exchanged, on the Change of Control Effective Date, for a proportionate share of any consideration to be paid to the shareholders generally in connection with the Change of Control.

			If any of the payments set forth in this Section 5(h)(i) would be subject to section 409A of the Code, payments on the Change of Control Effective Date shall be permitted only if the Change of Control is a change in control event as defined in section 409A and applicable regulations issued thereunder and only if payments would be permitted to the Employee as a result of the change in control event as a service provider to the relevant corporation undergoing the applicable change in control event. If payments would not be permitted under the foregoing provisions, all vesting provisions and accelerated transfer provisions shall continue to apply but any payments will not be accelerated and shall instead be made as of the original payment date as determined under the applicable award.

	(ii)		If the Date of Termination occurs (y) either by the Employee for Good Reason pursuant to Section 5(a)(iii) above or by SPSS without Good Cause pursuant to Section 5(a)(iv) above and if the Date of Termination occurs on or within two (2) years following the Change of Control Effective Date, or (z) by the Employee pursuant to the Special

Termination Provision of Section 5(a)(viii) above, SPSS will pay and/or provide (as applicable) to the Employee (except as otherwise provided in Section 7 of this Agreement) the payments and benefits described in Section 5(f); provided, however, that the Employee shall not be entitled to the payment described in Section 5(f)(v) but shall instead be entitled to a lump sum cash payment equal to the sum of:

	(A)		twenty four (24) months of the Employee’s monthly base salary (annual base salary divided by twelve (12)) in effect at the Date of Termination; and

	(B)		the product of (I) two (2), multiplied by (II) the quotient of (x) the aggregate incentive cash payments that the Employee received for the two (2) fiscal years of the Company ending immediately prior to the Date of Termination (determined after giving effect to the provisions of Section 5(f)(ii)), divided by (y) two (2).

			For purposes of this Section 5(h)(ii), if the event constituting Good Reason occurs during the thirty (30) day period immediately preceding the second anniversary of the Change of Control Effective Date and if the requirements set forth in Section 5(a)(iii) are otherwise satisfied, then the Date of Termination shall be treated as a termination by the Employee for Good Reason within two (2) years following the Change of Control Effective Date even though the actual Date of Termination does not occur within two (2) years following the Change of Control Effective Date.

	(iii)		For purposes of this Agreement, the term “Change of Control” shall mean any one or more of the following:

	(A)		the accumulation, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) of thirty three percent (33%) or more of the then outstanding common stock of SPSS;

	(B)		a merger or consolidation of SPSS in which SPSS does not survive as an independent public company;

	(C)		a sale of all or substantially all of the assets of SPSS;

	(D)		a triggering event under that certain Rights Agreement, dated as of June 18, 2008, between SPSS, Computershare Trust Company, N.A., as Rights Agent and Computershare Investor Services, L.L.C., as Transfer Agent, or any amendment, restatement or replacement thereof;

	(E)		a liquidation or dissolution of SPSS; or

(F)

a change in the composition of the Board not previously endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors, as a result of which fewer than a majority of the directors are Incumbent Directors (“Incumbent Directors” are directors who either (I) are directors of SPSS as of the Effective Date, or (II) are nominated for election to the Board by the Nominating and Corporate Governance Committee and endorsed by the Board existing as of the Effective Date or the directors’ endorsed successors).

Notwithstanding the foregoing, the following acquisitions shall not constitute a Change of Control for the purposes of this Agreement: (x) any acquisitions of common stock or securities convertible into common stock directly from SPSS, or (y) any acquisition of common stock or securities convertible into common stock by any employee benefit plan (or related trust) sponsored or maintained by SPSS. The term “Change of Control Effective Date,” as used herein in connection with a Change of Control, shall mean the date on which a Change of Control becomes effective.

6. Effect of Termination. In the event the Date of Termination occurs pursuant to Section 5, the Employee shall tender his resignation to the board of directors of SPSS and any Affiliate of SPSS on which he may then be serving. Following the Date of Termination pursuant to Section 5, the rights provided for in connection with such termination pursuant to Section 5 hereof and Sections 7 through 17 of this Agreement, shall continue in accordance with the terms and conditions of each respective Section.

7. Offsets. Except with respect to any payments that are subject to section 409A of the Code, SPSS shall be entitled to withhold any amounts from any payments required

to be made to the Employee herein, including without limitation, amounts due in respect of any SPSS capital stock, tax withholdings, and any amounts that the Employee owes to SPSS.

8. Tax Gross-Up.

	(i)		If SPSS does not desire to contest the claim, SPSS shall notify the Employee in writing and shall pay to the Employee a Make-Whole Payment, which Make-Whole Payment shall be paid within 15 days after the Employee notifies SPSS in writing that he has remitted the applicable taxes, but in no event later than the last day of the calendar year following the year in which the Employee remits the applicable taxes.

	(ii)		If SPSS desires to contest the claim, SPSS shall inform the Employee in writing prior to the end of the Consideration Period that it desires to contest such claim and the Employee shall:

	(A)		give SPSS any information requested by SPSS relating to such claim;

	(B)		take such action in connection with contesting such claim as SPSS shall reasonably request in writing from time to time, including,

			without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by SPSS;

	(C)		cooperate with SPSS in good faith in order to effectively contest such claim; and

	(D)		permit SPSS to participate in any proceedings relating to such claim;

10. Non-Competition; Confidentiality; Work for Hire.

	(i)		to disclose the same promptly to an officer of SPSS;

	(ii)		to grant and assign to SPSS, without additional payment or consideration of any kind, all of the Employee’s rights, titles and interests therein, as directed by SPSS;

	(iii)		to execute any applications, assignments and other instruments in writing that SPSS may prepare, at the Company’s expense, to apply for, obtain or maintain, solely for the benefit of SPSS, any patents or proprietary interests therein, in the United States and any and all foreign countries; and

	(iv)		to provide any and all assistance as SPSS may request, at the Company’s expense, in the prosecution of such applications, in the prosecution or defense of any patent interferences, and in any and all litigation in which SPSS may be involved relating to the same.

(e) The Employee further recognizes and agrees that:

	(i)		SPSS licenses the use of various computer software (“Licensed Software”) from a variety of outside companies. SPSS does not own the Licensed Software or its related documentation and, unless authorized by the licensor, does not have the right to reproduce it;

	(ii)		The Employee will use Licensed Software only in accordance with the terms of the applicable license agreement;

	(iii)		If the Employee learns of any misuse of Licensed Software or related documentation within SPSS, he shall notify the appropriate party at SPSS of the misuse;

	(iv)		SPSS employees caught making, acquiring or using unauthorized copies of Licensed Software will be disciplined as appropriate under the circumstances; and

	(v)		According to the U.S. Copyright Law, illegal reproduction of copyrighted Licensed Software can be subjected to various substantial civil damages and/or criminal penalties, including fines and imprisonment. Other Licensed Software may be covered by trade secret/confidentiality agreements which are protected under state laws.

(f) The Employee hereby further covenants and agrees that, during the period of his employment with SPSS, and during the Agreed Period (as hereinafter defined), the Employee shall not (i) be engaged or involved in any manner in Prohibited Activities (as hereinafter defined) in any Prohibited Territory (as hereinafter defined) or (ii) solicit or otherwise engage with (except pursuant to the Employee’s employment with SPSS) any customers or clients of SPSS existing on the date of such termination of the Employee’s employment with SPSS, in any transactions which are in direct competition with the statistical data analysis software business of SPSS which SPSS did or could have engaged in with those customers or clients at any time during the Employee’s employment with SPSS. For purposes of this Section 10, (i) “Prohibited Activities” shall mean any development, sales, marketing, licensing and/or distribution of any statistical data analysis software which is directly competitive with any products being marketed by SPSS or any of its Affiliates as of the date of reference, and (ii) “Prohibited Territory” means the United States, Europe and/or any other country or applicable geographic area where SPSS or its Affiliates are engaging, as of the date of reference, in the marketing of any products. The term “Agreed Period” shall mean a period of eighteen (18) months after the date of any expiration or termination of the Term of Employment; provided, however, that if the Employee intends to accept, and actually accepts, employment with a business entity that has its principal place of business and headquarters in Europe, and the Employee’s place of work for such entity shall be within Europe, then, with respect to Prohibited Activities in Europe and solicitation of SPSS customers located in Europe, the Agreed Period shall be a period of six (6) months after the date of any expiration or termination of the Term of Employment.

It is understood and agreed that the covenants made by the Employee in this Section 10 shall survive the expiration or termination of this Agreement.

14. Notices. Any notice given by either party hereunder shall be in writing and shall be personally delivered or shall be mailed, certified or registered mail, postage prepaid, as follows:


		To SPSS:		SPSS Inc. 233 South Wacker Drive 11th Floor Chicago, Illinois 60606 Attention: Chief Executive Officer

		With a copy to:		Frederick B. Thomas Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606

		To the Employee:		At the address of the Employee as set forth on the payroll records of SPSS.

or to such other address as may have been furnished to the other party by written notice.

15. Assignment. The rights and obligations of SPSS under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of SPSS.

may not be waived, changed, modified, extended or discharged 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.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.


SPSS Inc.
By:	/s/ Jack Noonan
	Name:	Jack Noonan
	Its:	President and Chief Executive Officer

Employee
/s/ Raymond H. Panza
Raymond H. Panza

EX-31.1 5 c50807exv31w1.htm EX-31.1 EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jack Noonan, certify that:

	1.		I have reviewed this Quarterly Report on Form 10-Q of SPSS Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 6, 2009	By:	/s/ Jack Noonan
		Jack Noonan
		President and Chief Executive Officer

EX-31.2 6 c50807exv31w2.htm EX-31.2 EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Raymond H. Panza, certify that:

	1.		I have reviewed this Quarterly Report on Form 10-Q of SPSS Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	(a)		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	(b)		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 6, 2009	By:	/s/ Raymond H. Panza
		Raymond H. Panza
		Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary

EX-32.1 7 c50807exv32w1.htm EX-32.1 EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that:

	1.		The Quarterly Report on Form 10-Q of SPSS Inc. for the period ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of SPSS Inc.



Date: May 6, 2009	By:	/s/ Jack Noonan
		Jack Noonan
		President and Chief Executive Officer

EX-32.2 8 c50807exv32w2.htm EX-32.2 EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C.
SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that:

	1.		The Quarterly Report on Form 10-Q of SPSS Inc. for the period ended March 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

	2.		The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of SPSS Inc.



Date: May 6, 2009	By:	/s/ Raymond H. Panza
		Raymond H. Panza
		Executive Vice President, Corporate Operations, Chief Financial Officer and Secretary

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