Document:

Prepared by R.R. Donnelley Financial -- EMPLOYEE RETENTION AND SEVERANCE PROGRAM

  
 Exhibit 10-A 
  
 National Steel Corporation 
 Chapter 11 Retention Programs 

 
 The Board of Directors of National Steel Corporation (“National Steel” or the “Company”) has approved the following Chapter 11
retention programs to cover certain employees throughout the bankruptcy period and until the date of the Company’s emergence: 
  

	 	·
	 
	Retention and Emergence Incentive Compensation Program:    This program covers 95 key employees and provides periodic fixed retention
payments on specified dates and a one-time payment upon the Company’s successful emergence from bankruptcy. The CEO and COO will not receive interim retention payments, instead their payments will accrue and will only be paid upon emergence.

 

  

	 	·
	 
	General Severance Program (non-union employees without employment contracts):  This program covers approximately 1,500 non-union employees
without employment contracts and provides severance benefits linked to seniority and pay levels upon an involuntary termination of employment without cause; provided, however, that the Company has not severed the employee in connection with or after
announcement of the closing or substantial closing of a major facility of the Company. 
 

  

	 	·
	 
	Senior Management Severance Program (non-union employees with employment contracts):  This program covers 20 key employees that have
prepetition employment contracts with the Company. The Company is not seeking to assume or reject these employment contracts at this time. However, the Company is seeking to provide these employees with the same severance and indemnity benefits as
provided under their respective employment agreements as modified herein. 
 

  

	 	·
	 
	National Steel Corporation Executive Deferred Compensation Plan:  National Steel covers 11 executives under a non-qualified deferred
compensation plan that is funded through a “Rabbi Trust”. The Company is seeking to exempt funds contained in the Rabbi Trust from the claims of creditors and to maintain the deferred compensation plan and Rabbi Trust during the pendency
of the bankruptcy. 
 

  
 Each of these arrangements is discussed below. 
 

 1 

  
 Background 
  
 National Steel is a leading manufacturer and seller of a wide variety of flat-rolled carbon steel products, used in a variety of automotive applications and in the construction market. The Company
employs approximately 8,400 employees. For the fiscal year ended December 31, 2001, the Company’s revenues were approximately $ 2.5 billion and its assets were approximately $ 2.3 billion. 
  

On March 6, 2002, the Company filed voluntary petitions with the U.S. Bankruptcy Court in the Northern District of Illinois (Chicago) to reorganize under Chapter 11 of the U.S. Bankruptcy
Code. Given the uncertainty created by the Chapter 11 filing, the Company wishes to implement key employee retention programs to incent key executives and employees to remain with the Company throughout the bankruptcy period. 
 

 2 

  
 Business Case For Implementing the Programs 
  

	 	·
	 
	The covered group of executives and key employees have been identified as critical to accomplishing the following corporate objectives: 

  

	 	·
	 
	The effective management of the Company’s on-going operations; 
 

	 	·
	 
	The enhancement of employee morale throughout the organization; and 
 

	 	·
	 
	The successful emergence of the Company from Chapter 11. 
 

  

	 	·
	 
	Significant turnover in the covered employee group may materially impair the Company’s ability to accomplish the foregoing objectives. 

  

	 	·
	 
	Replacing vacated positions may be more difficult due to the Company’s Chapter 11 filing. 
 

  

	 	·
	 
	The possibility of increased turnover exists due to the following reasons: 
 

  

	 	·
	 
	Increased employee insecurity due to the Chapter 11 filing; 
 

	 	·
	 
	Reduction in competitiveness of pay packages: 
 

  

	 	o
	 
	No annual incentive pay opportunity 
 

	 	o
	 
	No long-term incentive pay opportunity during pendency of bankruptcy. 
 

 

 3 

  
 Retention and Emergence Incentive Compensation Program 
  
 National Steel Corporation seeks to cover key executives and managers under a retention and emergence incentive compensation program. A summary of the key terms
and cost are set forth below: 
  
 
	 Employee Category
 
	  	 #
 
	  	 Aggregate Base Salary
 
	    	 Retention Payments
 (% of base pay)
 
	  	 Retention Payments
 
	    	 Emergence Payments
 (% of base pay)
 
	  	 Emergence Payments
 
	  	 Total Retention and Emergence Payments
 

	 Tier I:  CEO, COO and VPs
 	  	 12
 	  	 $
 	 2,951,260
 	    	 47%
 	  	 $
 	 1,390,652
 	    	 47%
 	  	 $
 	 1,390,652
 	  	 $
 	 2,781,304
 
	 Tier II:  General Managers and Directors
 	  	 62
 	  	 $
 	 7,019,544
 	    	 31%
 	  	 $
 	 2,205,110
 	    	 31%
 	  	 $
 	 2,205,110
 	  	 $
 	 4,410,220
 
	 Tier III.  Other Directors
 	  	 21
 	  	 $
 	 1,930,236
 	    	 21%
 	  	 $
 	 404,238
 	    	 21%
 	  	 $
 	 404,238
 	  	 $
 	 808,476
 
	  	  	 
	  	 
	 
	    	  	  	 
	 
	    	  	  	 
	 
	  	 
	 

	 Total
 	  	 95
 	  	 $
 	 11,901,040
 	    	  	  	 $
 	 4,000,000
 	    	  	  	 $
 	 4,000,000
 	  	 $
 	 8,000,000
 

 
  
 The specifications of the retention and emergence incentive compensation program follow.

 

 4 

  
 Retention and Emergence Incentive Compensation Program 
  

	 	1.
	 
	Purpose.    The National Steel Corporation Retention and Emergence Incentive Compensation Program (“Retention Program”) is
designed to incent and reward a select group of key executives and employees to remain in the employ of National Steel (“Company” or “NSC”) throughout the bankruptcy period and until the date of “Emergence.”

 

  

	 	2.
	 
	Effective Date.    The Retention Program will be effective as of the date on which it is adopted by the Board of Directors of the
Company and approved by the Bankruptcy Court. 
 

  

	 	3.
	 
	Eligibility for Participation.    The Retention Program will cover every employee of NSC who falls within one of the following
covered positions: 
 

  
 
	 Employee Category
 
	    	 # of Employees
 
	  	 Covered Positions
 

	 Tier  I
 	    	 12
 	  	 CEO, COO and Vice Presidents
 
	 Tier  II
 	    	 62
 	  	 General Managers and Certain Directors
 
	 Tier  III
 	    	 21
 	  	 Other Director Level Positions
 
	 Total
 	    	 95
 	  	  

 
  

	 	4.
	 
	Determination of Retention Payment Amount.    On each “Payment Date” specified on the chart below, each Participant will
receive a payment (a “Retention Payment”) in an amount that is equal to the “Applicable Payment Percentage” multiplied by the Participant’s “Annual Base Compensation:” 
 

  
 
	  	  	 Payment Date (months from filing date)
 
	    	 Total Payment
 

	 Employee Category
 
	  	 4 months
 07/06/02

	    	 10 months
 01/06/03

	    	 16 months
 07/06/03

	    	 22 months
 01/06/04

	    	 At Emergence
 
	    
	  	  	 Applicable Payment Percentage
 
	 Tier I
 	  	 11.75%
 	    	 11.75%
 	    	 11.75%
 	    	 11.75%
 	    	 47%
 	    	 94%
 
	 Tier II
 	  	 7.75%
 	    	 7.75%
 	    	 7.75%
 	    	 7.75%
 	    	 31%
 	    	 62%
 
	 Tier III
 	  	 5.25%
 	    	 5.25%
 	    	 5.25%
 	    	 5.25%
 	    	 21%
 	    	 42%
 

 
  
 Notwithstanding the foregoing, the CEO and COO are not eligible for
interim retention payments, and will only receive a payment upon Emergence. 
  

	 	5.
	 
	Definition of Annual Base Compensation.    For all purposes under the Retention Program, Annual Base Compensation means an
employee’s annual base compensation in effect on the date the Company filed for Chapter 11 under the U.S. Bankruptcy Code. 
 

  

	 	6.
	 
	Definition of Emergence.    Emergence means the earlier of the following to occur: (i) the effective date of a confirmed plan of
reorganization; or (ii) the date of a “Change-in-Control.” 
 

 

 5 

  

	 	7.
	 
	Definition of Change-in-Control.    The term “Change-in-Control” shall mean: (i) the sale, disposition or other transfer
(including by means of merger, consolidation or transfer of securities, by agreement, law or otherwise) of all or substantially all of the assets of the Company on an operating basis in one or a series of related transactions, or (ii) any
“person” (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than NKK Corporation or any subsidiary thereof, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least a majority of the combined voting power of the Company’s then outstanding voting securities; provided that, for purposes
of this paragraph 8, a Change-in-Control shall not be deemed to have occurred merely as a result of the existence of that certain Option Agreement, dated as of January 16, 2002 (as the same may be amended from time to time), by and among the
Company, United States Steel Corporation, NKK Corporation, NKK U.S.A. Corporation and NUF LLC. 
 

  

	 	8.
	 
	Eligibility to Receive Retention Payment.    Subject to paragraphs 10, 11, 12, 13 and 14, each Participant (including the CEO and
COO) is eligible to receive a Retention Payment if the Participant is employed with the Company on a continuous, full-time basis for the period commencing on the Effective Date (or such later date as the Board may designate) and ending on the
applicable Payment Date. For this purpose, an individual will be considered employed during any periods of absence due to a Board approved leave of absence or a Board approved short-term disability leave. 
 

  

	 	9.
	 
	Effect of Termination with Cause.    If prior to the next Payment Date a Participant’s employment is involuntarily terminated
with “Cause,” the Participant will forfeit any right to receive any unpaid Retention Payments (other than Retention Payments which may have accrued pursuant to the Retention Program prior to the date a Participant is terminated for Cause).
The term “Cause” means: (i) the willful and continued failure by a Participant to substantially perform such Participant’s duties with the Company (other than any such failure resulting from such Participant’s incapacity due to
physical or mental illness), after a written demand for substantial performance is delivered to such Participant by the Board of Directors of the Company in respect of Tier I Participants or by the Board of Directors of the Company or a Tier I
Participant in respect of Tier II or Tier III Participants that specifically identifies the manner in which the Company believes that such Participant has not substantially performed such Participant’s duties, and such Participant has failed to
resume substantial performance of such Participant’s duties on a continuous basis within five (5) business days of receiving such written demand; (ii) the willful engaging by a Participant in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise; (iii) a Participant’s conviction of, or the entering of a plea of nolo contendere to, a felony or conviction of a misdemeanor which impairs a Participant’s ability substantially to perform
such Participant’s duties with the Company; or (iv) the willful wrongful disclosure by the Participant of any secret process or confidential information of the Company. For purposes of this paragraph 10, no act, or failure to act, on the part
of a Participant shall be deemed “willful” unless done, or omitted to be done, by such Participant not in good faith
 
 

 

 6 

	 	
and without reasonable belief that such action or omission was in the best interests of the Company 
 

  

	 	10.
	 
	Effect of Termination without Cause.    If prior to the next Payment Date a Participant’s employment is involuntarily terminated
without Cause, the Company will pay to the Participant any currently owed Retention Payment and the accrued pro-rated portion of the Retention Payment that is payable as of the Payment Date next following such termination of employment. The
Participant will not be entitled to any other Retention Payments except as otherwise specified in the immediately preceding sentence. 
 

  

	 	11.
	 
	Effect of Voluntary Termination of Employment.    If prior to the next Payment Date a Participant voluntarily terminates employment
with the Company, then the Participant will forfeit the right to receive any Retention Payment due on such Payment Date or any later Payment Date. 
 

  

	 	12.
	 
	Effect of Death or Disability.    If prior to the next Payment Date a Participant terminates employment due to death or long-term
permanent “Disability,” the Company will pay to the Participant or, if applicable, to his or her legal representative, as soon as administratively practicable after the date of such termination, any currently owed Retention Payment and a
pro-rated portion of the Retention Payment that is payable as of the Payment Date next following such termination of employment. The Participant will not be entitled to any other Retention Payments except as otherwise specified in the immediately
preceding sentence. A Participant will be deemed to have terminated employment due to Disability if the Participant becomes entitled, on account of such termination, to disability benefits under the Company’s long-term disability plan.

 

  

	 	13.
	 
	Acceleration of Retention Payments.    If the date of Emergence occurs prior to January 6, 2004, then within three business days from
the date of such Emergence, a Participant will be paid a lump-sum cash amount equal to the aggregate value of all such Participant’s Retention Payments, less any Retention Payments paid to such Participant prior to the date of Emergence.

 

  

	 	14.
	 
	Effect on Other Company Benefit Programs.    Any Retention Payment payable hereunder will be in addition to, not in lieu of, any
other incentive compensation payment to which a Participant may otherwise be entitled pursuant to any other incentive compensation plan maintained by the Company. Amounts credited or paid under the terms of the Retention Program will not be taken
into account for purposes of calculating benefits under any other employee benefit plans that are maintained by the Company (including, but not limited to, qualified retirement plans, nonqualified retirement plans, annual incentive plans, life
insurance, disability benefits, and other health and welfare arrangements), except as otherwise provided in any such benefit plan. 
 

  

	 	15.
	 
	Interest Not Transferable.    The interest of a Participant under the Retention Program may not be voluntarily or involuntarily
transferred, assigned, alienated, pledged or encumbered. 
 

 

 7 

  

	 	16.
	 
	Tax Liability.    The Company will withhold from any Retention Payment any taxes required to be withheld with respect to such
payment. 
 

  

	 	17.
	 
	Employment Rights.    Participation in this Retention Program will not be construed to give any Participant the right to be retained
in the service of the Company. 
 

 

 8 

  
 General Severance Program 
 (Non-Union Employees Without Employment Contracts) 
  
 National Steel Corporation
seeks to cover approximately 1,500 non-union employees under a general severance program (the “General Severance Program”). The General Severance Program is intended to be consistent with prior Company practices. The principal terms of the
General Severance Program are set forth below. 
  

	·
	 
	Entitlement to Severance Benefits.    Upon involuntary termination of employment without Cause (as defined under the Retention
Program), an employee would be entitled to the following benefits: 
 

  

	 	o
	 
	Schedule A (no waiver).    If a terminated employee does not sign a waiver, then such employee would be entitled to one week of pay
for each full year of service up to four weeks of pay. The employee would not be eligible to receive Company-paid COBRA benefits. The employee would be paid any unused vacation. 
 

  

	 	o
	 
	Schedule B (signed waiver).    If a terminated employee signs a waiver, then such employee would be entitled to receive two to nine
months of pay (see schedule below) plus Company-paid COBRA benefits for the duration of the employee’s severance period. The employee would be paid any unused vacation. 
 

  

	 Years of Service
 
	  	 Administrative
 
	  	 Professional
 
	 	 Manager
 
	 	 Director
 

	 Less than 5
 	  	 2 months
 	  	 3 months
 	 	 4 months
 	 	 5 months
 
	 5 but less than 10
 	  	 3 months
 	  	 4 months
 	 	 5 months
 	 	 6 months
 
	 10 but less than 15
 	  	 4 months
 	  	 5 months
 	 	 6 months
 	 	 7 months
 
	 15 but less than 20
 	  	 5 months
 	  	 6 months
 	 	 7 months
 	 	 8 months
 
	 20 or more
 	  	 6 months
 	  	 7 months
 	 	 8 months
 	 	 9 months
 

 
  

	·
	 
	Potential Cost of Severance.    Set forth below is an analysis of potential estimated severance costs related to the National Steel
Corporation General Severance Program: 
 

  
 
	 Compensation Category
 
	    	 Avg.  Monthly Base
 
	    	 Months Severance
 
	  	 Severance Amount
 
	    	 Number Eligible
 
	  	 Total Estimated Cost
 

	 Administrative
 	    	 $
 	 4,094
 	    	 5
 	  	 $
 	 20,470
 	    	 486
 	  	 $
 	 9,948,420
 
	 Professional
 	    	 $
 	 4,574
 	    	 6
 	  	 $
 	 27,444
 	    	 638
 	  	 $
 	 17,509,272
 
	 Manager
 	    	 $
 	 7,077
 	    	 7
 	  	 $
 	 49,539
 	    	 219
 	  	 $
 	 10,849,041
 
	 Director
 	    	 $
 	 9,072
 	    	 8
 	  	 $
 	 72,576
 	    	 73
 	  	 $
 	 5,298,048
 
	  	    	 
	 
	    	 
	  	 
	 
	    	 
	  	 
	 

	 Total
 	    	  	  	    	  	  	  	  	    	 1,416
 	  	 $
 	 43,604,781
 

 
  
 The above estimated costs were determined utilizing the following
assumptions: 
  

	 	·
	 
	All salaried non-represented employees at all locations were severed. 
 

  

	 	·
	 
	Average Service for all Management Employees is 18 years. Severance amount for 15 – 20 years was used with the average salary for the compensation
category. 
 

  

	 	·
	 
	Estimated costs do not take into account potential severance costs related to employees of NSPC (such severance costs are estimated to be $3,000,000 assuming
all eligible NSPC employees were severed). 
 

  
 Estimated costs do not take into account potential severance costs related
to executives who are covered under employment contracts. 
 

 9 

  
 General Severance Program (cont.) 
  
 The General Severance Program will be subject to the following limitations: 
  

	 	·
	 
	No employee will be entitled to payments under the General Severance Program if such employee is terminated in connection with or after the announcement of the
closing or substantial closing of a major operating facility of the Company. 
 

  

	 	·
	 
	The Company may not continue to make severance payments under the General Severance Program if and after an aggregate total of $6.9 million has been spent
thereunder. 
 

  

	 	·
	 
	The Company may not continue to make severance payments under the General Severance Program if and after the aggregate number of persons severed reaches 15
percent of the salaried workforce as of the date the Court approves the General Severance Program. 
 

  

	 	·
	 
	Notwithstanding the limitations set forth above, if there is a Change-in-Control of the Company (as defined above in the Retention Program), the Company shall
be authorized to make payments under the General Severance Program totaling $17.0 million in the aggregate, inclusive of any severance amounts actually paid prior to the Change in Control. An employee shall be entitled to severance in a
Change-in-Control if such employee is not employed by the acquirer or successor company or terminated without cause less than three (3) months after the Change-in-Control. 
 

  

	 	·
	 
	Any payments under the General Severance Program (which shall not be paid in a lump sum, but shall be paid in the form of continuing salary) are subject to
mitigation by the terminated employee upon obtaining other employment. 
 

 

 10 

  
 Senior Management Severance Program 
 (Non-Union Employees With Employment Contracts) 
  
 National Steel has 20 key
employees with employment contracts. The Company is not seeking to assume or reject these employment contracts at this time. However, the Company is seeking to provide these employees with the same severance and indemnity benefits as provided under
their respective employment agreements as modified herein (the “Senior Management Severance Program”). 
  
 
	 Name
 
	  	 Title
 
	    	 Severance Multiple
 

	 Hisashi Tanaka
 	  	 Chairman and CEO
 	    	 2.00
 
	 John Maczuzak
 	  	 President and COO
 	    	 2.00
 
	 Kirk Sobecki
 	  	 SVP and Chief Financial Officer
 	    	 2.00
 
	 Ronald Werhnyak
 	  	 SVP, General Counsel and Secretary
 	    	 2.00
 
	 John Kaloski
 	  	 SVP—Commercial and Planning
 	    	 2.00
 
	 John Davis
 	  	 VP—Purchasing, IT and Engineering
 	    	 1.75
 
	 Michael Gibbons
 	  	 VP and GM – Granite City Division
 	    	 1.75
 
	 Stephen Denner
 	  	 VP—Research and Technology
 	    	 1.75
 
	 Daniel Joeright
 	  	 VP and GM—Regional Division
 	    	 1.75
 
	 William McDonough
 	  	 VP and Treasurer
 	    	 1.75
 
	 Lawrence Zizzo
 	  	 VP—Human Resources
 	    	 1.75
 
	 Thomas Peluso
 	  	 VP/GM of National Steel Pellet Company
 	    	 1.25
 
	 Robert Foley
 	  	 Asst. Controller—Accounting
 	    	 1.00
 
	 Stephen Thomas
 	  	 Asst. Treasurer
 	    	 1.00
 
	 Scott Ryan Hunter
 	  	 Asst. Controller—Finance
 	    	 1.00
 
	 John Moran Jr.
 	  	 Senior Counsel and Asst. Secretary
 	    	 1.00
 
	 Tamara Freeman
 	  	 GM—Safety, Health and Employee Welfare
 	    	 1.00
 
	 Vikram Singh
 	  	 GM—Construction Sales
 	    	 1.00
 
	 Robert Buescher
 	  	 Director—Human Resources of N.S.P.C.
 	    	 1.00
 
	 Scott Montross
 	  	 GM—Sheet, Tin and Appliance Sales
 	    	 1.00
 

 
  
 Severance Multiples are based on the sum of Annual Base Compensation plus Bonus, which
refers to the terminated employee’s highest target bonus in effect during the term of his employment contract. 
  
 The aggregate
potential cost of severance benefits provided under the executive employment contracts equals $8.9 million. 
  
 Scott Montross (GM Sheet,
Tin and Appliance Sales) has a severance provision in his employment contract that provides him one year of severance pay if and only if National Steel is sold to U.S. Steel. In all other circumstances, Scott Montross is a participant in the General
Severance Program. 
  
 Severance for these key employees will be payable under the same circumstances as set forth in the prepetition
employment contracts. 
 

 11 

  
 Senior Management Severance Program (cont.) 
  
 Notwithstanding the above, payments under the Senior Management Severance Program will be subject to the following limitations: 
  

	 	·
	 
	All executives other than the CEO and COO:    Upon a severance event, the terminated Key Officer will receive in a lump sum the
lesser of (i) the severance payment specified in the relevant Employment Contract or (ii) a payment equal to one year’s Annual Base Compensation plus Bonus (the “Lump Sum Payment”). Any severance amounts specified in the relevant
Employment Contract in excess of the Lump Sum Payment are fully earned but subject to mitigation by the terminated Key Officer upon obtaining new employment. 
 

  

	 	·
	 
	CEO and COO:    Although their employment contracts provide for two years’ severance, these Key Officers will initially be
entitled under the Senior Management Severance Program to only one year of severance, but shall earn an additional month of severance entitlement for each month of continuing employment by the Company after the Petition Date, capped at two years.
The CEO and COO shall not receive any severance in a lump sum, but instead, as to them, all severance payments shall be paid in the form of continuing salary, subject to mitigation upon obtaining new employment. The CEO shall not be entitled to any
severance, after a severance event, if he becomes employed by NKK or any NKK affiliate. 
 

  

	 	·
	 
	With respect to severance after a Change-in-Control, severance shall only be payable if payable under the prepetition employment contracts, the employee is not
employed by the acquirer or successor company or is terminated within six (6) months of the Change-in-Control. 
 

  

	 	·
	 
	The Key Officers shall be entitled to indemnification by the Company to the extent set forth in Company’s charter or bylaws, the Employment Contracts and
indemnification agreements with the Key Officers, but limited to (a) available director and officer liability insurance coverage, and (b) advancement of attorney fees and expenses and amounts not covered by an insurer as a result of deductibles or
retention provisions. This ensures that such Key Officers have appropriate coverage from the Company for amounts not covered by director and officer liability insurance, but not coverage in a potentially unlimited amount. The deductible under the
Company’s existing director and officer liability insurance is $750,000. 
 

 

 12 

  
 National Steel Corporation Executive Deferred Compensation Plan 

 
 National Steel Corporation covers its top eleven executives under the National Steel Corporation Executive Deferred Compensation Plan (“Deferred
Compensation Plan”). The Deferred Compensation Plan provides retirement benefits to eligible employees in addition to benefits that such employees may be eligible to receive under National Steel Corporation’s qualified retirement plans.
National Steel Corporation funds the Deferred Compensation Plan through contributions to a grantor trust that is intended to meet the tax requirements of a Rabbi Trust. 
  
 The grantor trust contains funds with an approximate value of $870,000, which covers the deferred compensation earned by these officers as of December 31, 2001. These funds are technically subject to
the claims of the Company’s creditors during bankruptcy. Under the Program, the Deferred Compensation Plan will be assumed and will continue and funds therein will be exempt from creditors’ claims. 
 

 13<PAGE>

                                                                   Exhibit 10.16

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of this 7th
day of August, 2002 by and between Click Commerce, Inc., a Delaware corporation
("Corporation"), and Michael W. Nelson, an individual residing 2004 North
Clifton; Unit A; Chicago, IL 60614 (the "Executive").

                                    RECITALS

         WHEREAS, the Corporation is engaged in the development, sale and
distribution of interactive computer applications and internet related products
and services involved in partner relationship management and "sell side"
electronic commerce solutions;

         WHEREAS, the Corporation desires to employ Executive as Vice President,
Chief Financial Officer and Treasurer of the Corporation;

         WHEREAS, the Executive desires to be employed by the Corporation at the
         salary and benefits provided for herein;

         WHEREAS, the Executive acknowledges and understands that during the
course of his employment, the Executive has and will become familiar with
certain confidential information of the Corporation which is exceptionally
valuable to the Corporation and vital to the success of the Corporation's
business; and

         WHEREAS, the Corporation and the Executive desire to protect such
confidential information from disclosure to third parties or use of such
information to the detriment of the Corporation.

                                    AGREEMENT

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

     1. Employment. The Corporation hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, as Vice President, Chief Financial
Officer and Treasurer of the Corporation.

     2. Term. The term of this Agreement shall commence as of August 7, 2002 and
shall continue until December 31, 2004 (the "Term"), unless earlier terminated
pursuant to Section 12 of this Agreement.

     3. Duties. The Executive shall have general responsibility for all
financial and accounting activities of the Corporation, and such other
responsibilities as may be determined by

                                      -1-

<PAGE>

the Chief Executive Officer of the Corporation or the Board of Directors in
accordance with the By-Laws of the Corporation in effect from time to time,
provided that such duties shall at all times be consistent with the duties
normally performed by Chief Financial Officers and Treasurers of companies
engaged in businesses similar to the business of the Corporation with similar
responsibilities and reporting to the Chief Executive Officer of the
Corporation. The Executive agrees to devote all of his business time, attention
and energies to the diligent performance of his duties hereunder and will not,
during the Term hereof, engage in, accept employment from, or provide services
to any other person, firm, corporation, governmental agency or other entity that
engages in, any activities which, in the opinion of the Board of Directors,
would conflict with or detract from the Executive's capable performance of such
duties; provided, however, that the Executive shall be permitted to attend a
weekend executive management post-graduate education program at a reputable
Chicago area business school, provided, further, that such educational
activities do not materially interfere with or materially detract from the
Executive's performance of his duties and obligations hereunder.

     4.  Compensation.

     (a) Base Salary. During the Term of this Agreement, the Executive shall
receive compensation at the annual rate of $170,000 payable in equal monthly
installments or as otherwise agreed to by the parties. The annual amount of
salary payments to the Executive during the Term of this Agreement shall be
referred to herein as the "Annual Salary."

     (b) Annual Incentive Bonus. During the Term of this Agreement, the
Executive shall participate in an annual bonus program if and as adopted by the
Corporation as determined by the Human Resources and Compensation Committee of
the Board of Directors in its sole discretion.

     (c) Stock Option Grant. The Corporation shall grant to the Executive,
subject to the approval of the Compensation and Human Resources Committee of the
Board of Directors of the Corporation, options to purchase an aggregate of
200,000 shares of common stock, par value $0.001 per share ("Common Stock"), of
the Corporation at an exercise price equal to the fair market value of the
Common Stock (being the average of the high and low price of the Common Stock on
the last trading date prior to the date of this Agreement) on the date of this
Agreement ("Options"), which Options shall be restricted and non-transferable,
as set forth in the Company's Amended and Restated Stock Option and Stock Award
Plan (the "Stock Option Plan") and, to the extent that Executive is employed by
the Corporation on the following vesting dates, the Options shall vest as
follows: 40,000 of the Options shall vest on December 31, 2002, 80,000 of the
Options shall vest on December 31, 2003 and 80,000 of the Options shall vest on
December 31, 2004. The term of the Options shall be for a period of ten (10)
years following the date of the grant of the Options hereunder and the Options
shall be subject to such other terms and conditions not inconsistent with the
terms of this Agreement as are set forth in the Stock Option Agreement, in the
form attached hereto as Exhibit A, to be executed by the Company and

                                      -2-

<PAGE>

the Executive, the Stock Option Plan and as determined by the Board of Directors
or any committee thereof. The Options shall be incentive stock options to the
extent permitted by law in each year and, with respect to vested options, shall
be exerciseable for a period of 90 days following termination of employment; and
the remaining options shall be non-qualified stock options ("NQSOs") which shall
be exerciseable for a period of one year following termination of employment.
The Executive shall not be entitled to any rights with respect to the shares of
Common Stock underlying the Options, including the right to vote or receive
dividends or distributions with respect to any of the shares of Common Stock
underlying the Options.

         (d) Acceleration of Option Vesting. In the event of a Change in Control
(as hereinafter defined) of the Corporation prior to the termination or
expiration of this Agreement, notwithstanding the vesting schedule set forth in
Section 4(c) hereof, all of the unvested Options shall vest coincident with the
Change in Control. For purposes of this Agreement, a "Change in Control" shall
mean (i) a sale to a third party of at least a majority of the outstanding
shares of Common Stock, (ii) a sale of substantially all of the assets of the
Corporation, or (iii) a merger or other consolidation with an unrelated third
party following which the ability to elect a majority of the members of the
Board of Directors or a majority of the voting power of the surviving
corporation is not held by the holders of Common Stock prior to such
transaction.

         5. Benefits. During the Term of this Agreement, the Corporation agrees
to provide to the Executive such benefits as are provided generally to other
senior executives of the Corporation from time to time, including, without
limitation, any health, disability, dental, severance benefits, insurance,
defined contribution plan, deferred compensation, profit-sharing, pension, or
other employee benefit policies, programs (including child day-care) or plans
which the Corporation offers generally to senior executives (collectively, the
"Employee Benefits"). Executive shall be entitled to three (3) weeks of vacation
during each twelve (12) month period hereunder. Pursuant to Corporation policy,
Executive shall not be entitled to accrue or carryover unused vacation from any
calendar year to the next calendar year. Executive shall be entitled to
participate in other compensation programs that the Corporation may make
available from time to time.

         6. Expenses. During the Term of this Agreement, the Executive shall be
reimbursed by the Corporation for all reasonable, ordinary and necessary
out-of-pocket expenses for travel, lodging, meals, entertainment expenses, or
any other similar expenses incurred by the Executive in performing services for
the Corporation to the extent that such expenditures meet the requirements of
the Internal Revenue Code of 1986, as amended (the "Code"), for total or partial
deductibility by the Corporation for federal income tax purposes and are
substantiated and documented by the Executive as required by the Code.

         7. Non-Disclosure of Confidential Information.

         (a) The Executive will not during, or for a period of five (5) years
after termination of, this Agreement, in any form or manner, directly or
indirectly, divulge, disclose or communicate to any person, entity, firm,
corporation or any other third party, or utilize for the

                                      -3-

<PAGE>

Executive's personal benefit or for the benefit of any competitor of the
Corporation, any Confidential Information (as hereinafter defined).

         (b) For the purposes of this Agreement, the term "Confidential
Information" shall mean, but shall not be limited to, any technical or
non-technical data, formulae, patterns, compilations, programs, devices,
methods, techniques, drawings, designs, processes, procedures, improvements,
models or manuals of the Corporation or which are licensed by the Corporation,
any financial data or lists of actual or potential customers or suppliers of the
Corporation, and any information regarding the Corporation's marketing, sales or
dealer network, which is not generally known to the public through legitimate
origins. The Corporation and the Executive acknowledge and agree that such
Confidential Information is extremely valuable to the Corporation and shall be
deemed to be a "trade secret." In the event that any part of the Confidential
Information becomes generally known to the public through legitimate origins
(other than by the breach of this Agreement by the Executive or by
misappropriation), that part of the Confidential Information shall no longer be
deemed Confidential Information for the purposes of this Agreement, but the
Executive shall continue to be bound by the terms of this Agreement as to all
other Confidential Information.

         (c) Upon termination of this Agreement for any reason, the Executive
will promptly deliver to the Corporation all correspondence, drawings,
blueprints, manuals, letters, notes, notebooks, reports, programs, plans,
proposals, financial documents, or any other documents, including all copies in
any form or media, concerning the Corporation's customers, dealer network,
marketing strategies, products or processes and/or which contains Confidential
Information.

         8. Covenant-Not-To-Compete. The Executive will not during, or for a
period of two (2) years after termination of, this Agreement, in any form or
manner, directly or indirectly, on his own behalf or in combination with others,
become interested in (as an individual, partner, stockholder, director, officer,
principal, agent, independent contractor, employee, trustee, lender of money or
in any other relation or capacity whatsoever, except as a holder of securities
of a corporation whose securities are publicly traded and which is subject to
the reporting requirements of the Securities Exchange Act of 1934, and then only
to the extent of owning not more than two percent (2%) of the issued and
outstanding securities of such corporation), or provide services similar to
those provided to the Corporation for, any business which renders implementation
services or sells products, or proposes to render services or sell products,
that compete with the Business of the Corporation within the United States,
Western Europe or Australia. For purposes of this Agreement, the "Business" of
the Corporation shall mean providing both partner relationship management and
"sell-side" application software electronic commerce solutions and related
implementation services.

         9. Covenant Not to Solicit.

     (a) Covenant Not to Solicit Employees. During Executive's employment by the
Corporation and for a period of two (2) years following termination or cessation
of Executive's

                                      -4-

<PAGE>

employment pursuant to this Agreement, Executive agrees and covenants that he
will not, for any reason, directly or indirectly, employ, solicit or endeavor to
entice away from the Corporation or any of its affiliates (whether for his own
benefit or on behalf of another person or entity), or facilitate the
solicitation, employment or enticement of, any employees of Corporation to work
for Executive, any affiliate of Executive or any competitor of Corporation, nor
will Executive otherwise attempt to interfere (to the Corporation's detriment)
in the relationship between the Corporation or any of its affiliates and any
such employees.

           (b) Covenant Not to Solicit Customers. During Executive's employment
pursuant to this Agreement and for a period of two (2) years following
termination or cessation of Executive's employment, Executive agrees and
covenants that he will not directly or indirectly in any form or manner,
contact, solicit, or facilitate the contacting or solicitation of any Customers
of the Corporation, for the purpose of competing with the Business of the
Corporation. For purposes of this Agreement, a "Customer" of the Corporation
shall mean and refer to (i) each person that has received services or purchased
products from the Corporation or any of its affiliates during the period of
Executive's employment hereunder and (ii) each person or entity formally
solicited by the Corporation to provide services or purchase products during the
period of Executive's employment hereunder.

           10. Equitable Remedies. In the event that the Executive breaches any
of the terms contained in Sections 7, 8 or 9 of this Agreement, the Executive
stipulates that said breach will result in immediate and irreparable harm to the
business and goodwill of the Corporation and that damages, if any, and remedies
at law for such breach would be inadequate. The Corporation shall therefore be
entitled to apply for and receive from any court of competent jurisdiction an
injunction to restrain any violation of this Agreement and for such further
relief as the court may deem just and proper, and the Executive shall, in
addition, pay to the Corporation, following judgment or other final
determination by such court, the Corporation's costs and expenses in enforcing
such terms (including court costs and reasonable attorneys' fees).

           11. Continuing Obligation. The obligations, duties and liabilities of
the Executive pursuant to Sections 7, 8 and 9 of this Agreement are continuing,
absolute and unconditional and shall remain in full force and effect as provided
therein despite any termination of this Agreement for any reason whatsoever,
including, without limitation, the expiration of the Term of this Agreement.

           12. Termination of Employment.

           (a) Termination by Corporation of Executive for Cause. The
Corporation shall have the right to terminate the Executive's employment at any
time for "cause." For purposes hereof, "cause" shall mean that the Executive
has:

           (i) been convicted of, or plead nolo contendere to, a felony or crime
               involving moral turpitude; or

                                      -5-

<PAGE>

           (ii)  committed an act of personal dishonesty or fraud involving
                 personal profit in connection with the Executive's employment
                 by the Corporation; or

           (iii) committed a breach of any material covenant, provision, term,
                 condition, understanding or undertaking set forth in this
                 Agreement, including, without limitation, the provisions
                 contained in Sections 7, 8 and 9 hereof; or

           (iv)  committed an act which the Board of Directors of the
                 Corporation has found to have involved willful misconduct or
                 gross negligence on the part of the Executive; or

           (v)   exhibited documented habitual absenteeism or been unable or
                 repeatedly failed to perform any reasonable or customary
                 material tasks typically required in connection with the
                 Executive's employment and position with the Corporation or
                 its subsidiaries;

provided, however, that no termination under clause (iii) or (v) of this Section
12(a) shall be effective unless the Executive shall have first received written
notice describing in reasonable detail the basis for the termination and within
15 days following delivery of such notice the Executive shall have failed to
cure such alleged behavior constituting "cause"; provided, further, that this
notice requirement prior to termination shall be applicable only if such
behavior or breach is capable of being cured. If the Corporation shall terminate
the Executive's employment pursuant to this Section 12(a), the Executive shall
forfeit all rights with respect to the Options (whether or not vested) granted
to the Executive pursuant to Section 4(c). In addition, the Corporation shall be
obligated to pay to the Executive the Annual Salary then in effect and the
Employee Benefits payable to the Executive pursuant to this Agreement, accrued
up to and including the date on which the Executive's employment is so
terminated. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive.

           (b)   Termination by Corporation of Executive Because of Executive's
Disability, Injury or Illness. The Corporation shall have the right to terminate
the Executive's employment if the Executive is unable to perform the duties
assigned to him by the Corporation because of the Executive's disability, injury
or illness (as such terms may be defined under the applicable disability plan
covering the Executive); provided, however, that in the event of such
disability, injury or illness, the Executive's inability to perform such duties
must have existed for (x) the period for eligibility for coverage set forth in
the long-term disability policy maintained by the Corporation, or (y) a total of
six (6) months in any consecutive twelve (12) month period if there is no such
policy in existence, before such termination can be made effective. If the
Corporation shall terminate the Executive's employment pursuant to this
Section 12(b), the Corporation shall be obligated (i) to pay to the Executive
the Annual Salary then in effect payable to the Executive pursuant to this
Agreement, accrued up to and including the date on which the Executive's
employment is so terminated, and (ii) to provide Employee Benefits to the extent
the Executive remains eligible to continue to participate in such Employee
Benefits pursuant to the terms and conditions of such policies, programs or
plans. Notwithstanding

                                      -6-

<PAGE>

anything to the contrary in this Agreement, the Corporation's obligations to
make payments to the Executive shall be reduced by any amounts actually paid to
the Executive pursuant to any disability insurance payments received by the
Executive pursuant to the Employee Benefits or otherwise. In the event of a
termination of the Executive's employment pursuant to this Section 12(b), the
Executive shall be entitled to retain all Options vested pursuant to Section
4(c) hereof as of the date of termination.

           (c)   Termination by Corporation as a Result of Executive's Death.
The obligations of the Corporation to the Executive under this Agreement
(except as provided in this Section 12(c)) shall automatically terminate upon
the Executive's death and the Corporation shall then only be obligated to pay
to the Executive's estate the Annual Salary then in effect and the Employee
Benefits payable to the Executive pursuant to this Agreement, accrued up to and
including the date on which the Corporation's obligation to the Executive is so
terminated. Thereafter, the Corporation shall have no further obligation
whatsoever to the Executive. In the event of a termination of the Executive's
employment pursuant to this Section 12(c), the Executive shall be entitled to
retain all Options vested pursuant to Section 4(c) hereof as of the date of
termination. In the event of the Executive's death, any payments due to the
Executive shall be paid to the Executive's estate.

           (d)   Termination of Executive for Any Other Reason. The Corporation
shall have the right to terminate the Executive's employment for any other
reason upon prior written notice to the Executive. In the event of a termination
of the Executive's employment for any reason other than the reasons set forth
in Sections 12(a), 12(b) or 12(c) hereof, (i) the Corporation shall be obligated
to provide twelve (12) months severance or the balance of this Agreement,
whichever is shorter, in equal semi-weekly installments or otherwise as agreed
to by the parties, (ii) the Corporation shall be obligated to provide the
Employee Benefits, at its expense, if and to the extent the Executive remains
eligible to participate in such Employee Benefits pursuant to the terms and
conditions of such policies, programs or plans, for the remaining period of the
Term, or if Executive is not eligible, then the Corporation shall reimburse
Executive for payments for health care coverage provided pursuant to the
Comprehensive Omnibus Budget Reconciliation Act for the remaining period of the
Term, and (iii) the Executive shall be entitled to retain all Options vested
pursuant to Section 4(c) hereof as of the date of termination. Thereafter, the
Corporation shall have no further obligation whatsoever to the Executive.

           (e)   Termination by Executive. The Executive may resign and
terminate his employment by the Corporation for any reason whatsoever upon
thirty (30) days prior written notice to the Corporation. Thereafter, the
Corporation shall have no obligation to the Executive, except for those
obligations provided as a matter of federal or state law. In the event of a
termination of the Executive's employment pursuant to this Section 12(e), the
Executive shall be entitled to retain all Options vested pursuant to Section
4(c) hereof as of the date of termination.

           (f)   Good Reason. If, during the Term of this Agreement, the
Executive resigns for Good Reason (as defined below), (i) the Corporation shall
be obligated to provide twelve (12)

                                      -7-

<PAGE>

months severance or the balance of this Agreement, whichever is shorter, in
equal semi-weekly installments or otherwise as agreed to by the parties, (ii)
the Corporation shall be obligated to provide the Employee Benefits, at its
expense, if any and to the extent the Executive remains eligible to participate
in such Employee Benefits pursuant to the terms and conditions of such policies,
programs or plans, for the remaining period of the Term, or if Executive is not
eligible, then the Corporation shall reimburse Executive for payments for health
care coverage provided pursuant to the Comprehensive Omnibus Budget
Reconciliation Act for the remaining period of the Term, and (iii) the Executive
shall be entitled to retain all Options vested pursuant to Section 4(c) hereof
as of the date of termination. Thereafter, the Corporation shall have no further
obligation whatsoever to the Executive. For purposes of this Agreement, "Good
Reason" shall mean a requirement by the Corporation that the Executive report
for the performance of his services hereunder on a regular or permanent basis at
any location or office more than fifty (50) miles from Chicago, Illinois.

           13.  Capacity. The Executive hereby represents and warrants that, in
entering into this Agreement, he is not in violation of any contract or
agreement, whether written or oral, with any other person, firm, partnership,
corporation or other entity to which he is a party or by which he is bound and
will not violate or interfere with the rights of any other person, firm,
partnership, corporation or other entity. In the event that such a violation or
interference does occur, or is alleged to occur, notwithstanding the
representation and warranty made hereunder, the Executive shall indemnify the
Corporation from and against any and all manner of expenses and liabilities
incurred by the Corporation or any affiliated company of the Corporation in
connection with such violation or interference or alleged violation or
interference.

           14.  Entire Agreement. This Agreement contains the entire agreement
between the parties and shall not be modified except in writing by the parties
hereto. Furthermore, the parties hereto specifically acknowledge and agree that
this agreement supersedes all prior agreements between the Executive, the
Corporation and its officers, directors, and agents, if any and in whatever
capacity so entered into, whether written or oral, and all such prior
agreements, whether written or oral, shall be of no further force or effect from
and after the date hereof.

           15.   Severability. If any phrase, clause or provision of this
Agreement is declared invalid or unenforceable by a court of competent
jurisdiction, such phrase, clause or provision shall be deemed severed from
this Agreement, but will not affect any other provisions of this Agreement,
which shall otherwise remain in full force and effect. If any restriction or
limitation in this Agreement is deemed to be unreasonable, onerous and unduly
restrictive by a court of competent jurisdiction, it shall not be stricken in
its entirety and held totally void and unenforceable, but shall remain effective
to the maximum extent permissible within reasonable bounds.

                                      -8-

<PAGE>

         16. Notices. Any notice, request or other communication required to be
given pursuant to the provisions hereof shall be in writing and shall be deemed
to have been given when delivered in person, on the next business day after
being delivered to a nationally-recognized overnight courier service (for such
next-day delivery) or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, return receipt requested and
addressed to the other party at its or his last known address. The address of
any party may be changed by notice in writing to the other party duly served in
accordance herewith.

         17. Waiver. The waiver by the Corporation or the Executive of any
breach of any term or condition of this Agreement shall not be deemed to
constitute the waiver of any other breach of the same or any other term or
condition hereof.

         18. Governing Law. This Agreement and the enforcement hereof shall be
governed and controlled in all respects by the internal laws, and not the laws
of conflict, of the State of Illinois.

         19. Advanced Education Reimbursement. The parties acknowledge and agree
that the Corporation believes that advanced management education is customary
for an individual in Executive's management position and that the Corporation
derives a material benefit from such education and experience, therefore,
subject to any limitations imposed by the Sarbanes-Oxley Act of 2002, any rules
or regulations of the Securities and Exchange Commission, any rules or
regulations of any exchange or stock market on which the shares of Common Stock
are traded, or any other applicable laws, rules or regulations (collectively,
the "Corporate Reform Laws"), in the event that Executive is admitted to a
graduate executive management program at the Kellogg School of Management,
Northwestern University (or another similar weekend executive management
post-graduate business program at a reputable Chicago-area graduate business
school), then during the term of Executive's employment by the Corporation, the
Corporation shall reimburse Executive for the expenses of tuition, books and
supplies (other than a laptop computer) incurred by Executive. Subject to any
limitations imposed by any Corporate Reform Laws, in the event that Executive's
employment by the Corporation is terminated for any reason prior to completion
of such education or at any time prior to the date which is two years following
completion of such education, Executive shall be required to reimburse the
Corporation for any amounts reimbursed to Executive hereunder by the
Corporation. Executive acknowledges and agrees that the Corporation shall be
permitted to offset any amounts payable to Executive pursuant to Section 12
hereof and to attach any amounts received through the exercise of Options in
order to satisfy amounts reimbursable to the Corporation hereunder.

         20. Assignment of Inventions. The Executive shall disclose promptly in
writing to a designated representative of the Corporation all material of a
proprietary nature, including, but not limited to, ideas, inventions,
discoveries, improvements, developments, designs, methods, systems, computer
programs, trade secrets or any other intellectual property whether or not
patentable or copyrightable, specifically including, but not limited to,
copyright and mask works, formulae, compositions, products, processes,
apparatus, and new uses of existing materials or machines (hereafter
collectively called "Inventions") made, conceived or first reduced to practice
by the Executive solely or jointly with others while employed by the
Corporation. The Corporation shall be the owner of all property rights in any
such Inventions, including, but not

                                      -9-

<PAGE>

limited to, rights arising from the obtaining of letters of patent or copyright
in respect thereof, which shall be vested in the Corporation. The Executive will
at the Corporation's request execute any and all assignment, patent or copyright
forms and the like, deemed reasonably necessary by the Corporation, and will
assist in drafting of any description or specification of the Inventions as may
be required by the Corporation to protect the Corporation's rights in and to the
Inventions, including, but not limited to, application(s) for letters of patent.
The Corporation's rights hereunder shall not be limited to this country but
shall extend to any country in the world and shall attach to each Invention
notwithstanding that it is perfected, improved, reduced to specific form or used
after termination the Executive's employment. The Executive agrees to lend such
assistance as he may be able, at the Corporation's request without charge in
connection with any proceedings relating to such letters of patent, trade
secrets, copyright or application thereof, as may be determined by the
Corporation to be reasonably necessary. In such case the Corporation will
reimburse expenses which the Executive may reasonably incur in assisting the
Corporation to obtain, assert, defend and protect such letters of patent, trade
secrets, copyright or other protection.

         21. Successors. This Agreement is personal to the Executive and shall
not be assignable by the Executive otherwise by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Corporation to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Corporation would be required to perform
if no such succession had taken place. All references to the Corporation shall
also refer to the any such successor.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                      CLICK COMMERCE, INC.

                                      By /s/ Michael W. Ferro, Jr.
                                         ------------------------
                                         Michael W. Ferro, Jr.,
                                         Chairman and Chief Executive Officer

                                      EXECUTIVE

                                         /s/ Michael W. Nelson
                                         ---------------------
                                             Michael W. Nelson

                                     Address: 2004 North Clifton; Unit A
                                              Chicago, IL 60614

                                    10 of 10

<PAGE>

                                                                   Exhibit A

                              CLICK COMMERCE, INC.
                             STOCK OPTION AGREEMENT

         THIS STOCK OPTION AGREEMENT, is made as of August 7, 2002 (the
 "Grant Date") between Click Commerce, Inc., a Delaware corporation (the
 "Company"), and Michael W. Nelson (the "Optionee").

                              W I T N E S S E T H:

         WHEREAS, the Company desires to provide the Optionee with the
opportunity to purchase shares of its common stock, $.001 par value per share
(the "Common Stock"), in accordance with the terms of the Click Commerce, Inc.
Stock Option Plan (the "Plan"):

         NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto mutually
covenant and agree as follows:

         1. Grant of Option. The Company hereby grants to the Optionee an option
(the "Option") to purchase all or any part of an aggregate of 200,000 shares of
Common Stock on the terms and conditions hereinafter set forth. The Option is
hereby designated as an "Incentive Stock Option" ("ISO") within the meaning of
Section 422(b) of the Internal Revenue Code ("code"), to the extent permitted
under that section.

         2. Purchase Price. The per share purchase price of the shares of
Common Stock issuable upon exercise of the Option shall be $0.73.

         3. Term. Except as provided in Section 6, the term of the Option
designated as an ISO shall be for a period of ten (10) years from the Grant
Date. The term of the Option not meeting the requirements of Section 422(b) of
the Code shall be for a period of ten (10) years from the Grant Date.

         4. Vesting.

         (a) Subject to the forfeiture provisions of Section 6, the Optionee
shall become vested in the Option granted hereunder over the period from the
Grant Date, as follows:

                  Percentage Vested         Vesting Date
                  -----------------         ------------

                        20%                 On December 31, 2002
                        60%                 On December 31, 2003
                        100%                On December 31, 2004

         (b) Notwithstanding anything contained in the Plan to the contrary,
coincident with a Change of Control (as hereinafter defined), all of the
unvested Option shall vest. For purposes of this agreement, a "Change in
Control" shall mean (i) a sale to a third party of at least a majority of the
outstanding shares of Common Stock, (ii) a sale of substantially all of the
assets of the Corporation, or (iii) a merger or other consolidation with an
unrelated third party following which the ability to elect a majority of the
members of the Board of Directors or a majority of the voting power of the
surviving corporation is not held by the holders of Common Stock prior to such
transaction.

         5. Exercise. Subject to the forfeiture provisions of Section 6, the
Optionee shall not be entitled to exercise the Option until it is vested.
Notwithstanding the foregoing, the Option shall not be exercisable after the
expiration date of the Option.

         6.  Termination of Option on Certain Events. The Option term and the
Optionee's rights hereunder shall terminate on the date of Optionee's
termination of employment with the Company ("Termination Date"), subject to the
following:

                                     1 of 4

<PAGE>

         (a) Death or Permanent Disability. If Optionee's termination of
employment by the Company is due to Optionee's death or "permanent disability"
(as hereinafter defined), the Optionee shall forfeit any right to purchase
shares of Common Stock under the Option to the extent not vested as of the date
of termination of employment. The Option, to the extent vested, may thereafter
be exercised by the Optionee or Optionee's executor, administrator or other
personal or legal representative, as applicable for a period of 90 days
following Optionee's termination of employment for ISOs and for one year
following Optionee's termination of employment for Options which do not qualify
as ISOs. "Permanent disability" shall have the meaning set forth in Section
12(c) of that certain employment agreement between Optionee and the Company
dated as of August 7, 2002 ("Employment Agreement").

         (b) Voluntary Termination or Involuntary Termination Other Than For
Cause. In the event of the Optionee's voluntary termination or involuntary
termination of employment by the Company without "cause" (as defined below), the
Optionee shall forfeit any nonvested right to purchase shares of Common Stock
under the Option as of the date of termination of employment. The Option, to the
extent vested, may thereafter be exercised by the Optionee or, if the Optionee
dies during the remainder of the Option's term, by the Optionee's executor,
administrator or other personal or legal representative, as applicable for a
period of 90 days following Optionee's termination of employment for ISOs and
for one year following Optionee's termination of employment for Options which do
not qualify as ISOs.

         (c) Termination for Cause. All of Optionee's rights hereunder shall
terminate upon the Company's written or oral notice to the Optionee that the
Optionee's employment by the Company is being terminated for "cause" (as
hereinafter defined), and all rights to purchase shares of Common Stock under
the Option (whether or not vested according to the schedule of Section 4) shall
be forfeited. The Company shall have "cause" to terminate Optionee's employment
with the Company, as set forth and defined in Section 12(a) of the Employment
Agreement.

         7. Nontransferability. The Option shall not be transferable otherwise
than by will or the laws of descent and distribution to the extent provided in
Sections 5 and 6, and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee. Without limiting the generality of the
foregoing, the Option may not be assigned, transferred (except as provided
above), pledged or hypothecated in any way, shall not be assignable by operation
of law, and shall not be subject to execution, attachment or similar process,
and any attempt to do so shall be void.

         8. Method of Exercising Option.

         (a) Subject to the terms and conditions of this Agreement, the Option
may be exercised by written notice by registered or certified mail, return
receipt requested, addressed to the Company at its offices at the address for
notices set forth in Section 10 or to its designated representative by written
notice. Such notice shall state that the Option is being exercised thereby and
the number of shares of Common Stock in respect of which it is being exercised.
It shall be signed by the person or persons so exercising the Option and shall
be accompanied by payment in full of the Option price for such shares of Common
Stock (i) in cash, (ii) in shares of Common Stock held by the Optionee for a
period of six months to be valued at the Fair Market Value (as defined in
Section 6(b) of the Plan) thereof on the date of such exercise, (iii) with a
combination of the foregoing, or (iv) by other means authorized by the
Committee. If the tender of shares of Common Stock as payment of the Option
price would result in the issuance of fractional shares of Common Stock, the
Company shall instead return the balance in cash or by check to the Optionee. If
the Option is exercised by any person or persons other than the Optionee under
Section 6(a), the notice shall be accompanied by appropriate proof of the right
of such person or persons to exercise the Option. The Company shall issue, in
the name of the person or persons exercising the Option, and deliver a
certificate or certificates representing such shares as soon as practicable
after notice and payment shall be received.

         (b) The Option may be exercised in accordance with Section 5 and the
terms of the Plan with respect to any whole number of shares included therein,
but in no event may an Option be exercised as to less than one hundred (100)
shares at any one time, or the remaining shares covered by the Option if less
than two hundred (200).

         (c) The Optionee shall have no rights of a stockholder with respect to
shares of Common Stock to be acquired by the exercise of the Option until the
date of issuance of a certificate or certificates representing such shares.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date is

                                     2 of 4

<PAGE>

prior to the date such stock certificate is issued. All shares of Common Stock
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable.

         (d) If at any time the Company is required to withhold tax on ordinary
income recognized by the Optionee with respect to the shares received under the
Option, the amount required to be withheld shall be provided to the Company by
the Optionee. Such amount shall be paid in due course by the Company to the
applicable taxing authorities as income taxes withheld.

         9. General. The Company shall during the term of the Option reserve and
keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of this Agreement, shall pay all original issue taxes,
if any, with respect to the issuance of shares of Common Stock hereunder and all
other fees and expenses necessarily incurred by the Company in connection
herewith, and shall, from time to time, use its best efforts to comply with all
laws and regulations which, in the opinion of counsel for the Company, shall be
applicable hereto.

         10. Notices. Each notice relating to this Agreement shall be in writing
and shall be sufficiently given if sent by registered or certified mail, or by
nationally recognized overnight delivery service, postage or charges prepaid, to
the address as hereinafter provided. Any such notice or communication given by
mail shall be deemed to have been given two business days after the date so
mailed, and such notice or communication given by overnight delivery service
shall be deemed to have been given one business day after the date so sent. Each
notice to the Company shall be addressed to it at its offices at 200 East
Randolph Street, 49th floor, Chicago, Illinois 60601 (Attention: Rebecca Maskey)
or the Company's designee. Each notice to the Optionee or other person or
persons then entitled to exercise the Option shall be addressed to the Optionee
or such other person or persons at the Optionee's last known address.

         11. Incorporation of the Plan. Notwithstanding the terms and conditions
contained herein, this Agreement shall be subject to and governed by all the
terms and conditions of the Plan. A copy of the Plan has been delivered to the
Optionee and is hereby incorporated by reference. In the event of any
discrepancy or inconsistency between the terms and conditions of this Agreement
and of the Plan, the terms and conditions of the Plan shall control.

         12. Continuance of Involvement with the Company. The granting of the
Option is in consideration of the Optionee continuing as a director, officer,
consultant or employee of the Company or any subsidiary; provided, that nothing
in this Agreement shall confer upon the Optionee the right to continue as a
member of the board, as an officer of the Company, as a consultant to the
Company or in the employ of the Company or any subsidiary or affect the right of
the Company or any subsidiary to terminate the Optionee's membership,
officership, consulting arrangement or employment at any time in the sole
discretion of the Company or any subsidiary, with or without cause.

       13. Interpretation. The interpretation and construction of any terms
or conditions of the Plan, or of this Agreement or other matters related to the
Plan by the Committee shall be final and conclusive.

       14. Enforceability. This Agreement shall be binding upon the Optionee
and such Optionee estate, personal representative and beneficiaries.

                                     *  *  *

       IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and the Optionee has executed
this Agreement all as of the day and year first above written.

                                         CLICK COMMERCE, INC.

                                         By:
                                            --------------------------------
                                         Its:
                                             -------------------------------

                                     3 of 4

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                                    OPTIONEE:

                                    ________________________
                                        Michael W. Nelson

cc:   Michael W. Ferro

                                     4 of 4

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