1
[HYPERION SOFTWARE LETTER HEAD]
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (hereinafter referred to as "Agreement") made as of
the 1st day of July, 1996, between XXXXXXX X. XXXXXXXXX, of Pelham, New York,
(hereinafter referred to as the "Employee") and Hyperion Software Operations,
Inc., a Delaware corporation with offices at 000 Xxxx Xxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (hereinafter referred to as the "Corporation").
WHEREAS, the Corporation desires to employ the Employee, and the
Employee desires to serve as an employee of the Corporation on the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and promises of
the parties hereto, the Corporation and the Employee agree as follows:
1. EMPLOYMENT: The Corporation hereby agrees to employ the Employee as Vice
President, Sales to perform certain managerial and executive functions of the
Corporation, and the Employee hereby agrees to perform such services for the
Corporation on the terms and conditions hereinafter stated, subject to the
directives of the Board of Directors of the Corporation.
2. TERM OF EMPLOYMENT: The term of this Agreement shall begin on July 1,
1996 and shall continue in full force and effect until June 30, 1999, provided,
however, that this Agreement shall be automatically renewed on a year-to-year
basis thereafter unless terminated by either party on at least six (6) months'
prior written notice during any given year, unless sooner terminated as provided
herein. Notwithstanding the foregoing, the Corporation may terminate this
Agreement at any time without cause upon thirty (30) days' written notice to
Employee in
2
which event the Corporation shall pay severance to Employee pursuant to Section
8(g) hereof.
3. COMPENSATION: During the term of this Agreement, for all services
rendered by Employee under this Agreement, the Corporation shall pay the
Employee an annual base salary of $150,000 per annum, payable in arrears at a
rate of $6250 on the fifteenth and the last day of each month. It is understood
that the foregoing base salary is the base salary in effect for the
Corporation's 1996 fiscal year and that such base salary will be increased, on a
pro rata basis on July 1, 1997. The Employee's base salary may be increased by
the Board of Directors from time to time in its sole and absolute discretion. In
addition to the annual base salary described in this Section, Employee may
receive cash performance bonuses according to bonus plans that have been agreed
with the Senior Vice President, Xxxxx Sample.
4. STOCK OPTION: All options to purchase shares of the Common Stock of the
Corporation's parent, Hyperion Software Corporation ("Parent") previously
granted to the Employee by agreement between the Parent and the Employee, under
the 1991 Stock Plan of the Parent or otherwise, shall continue in full force and
effect in accordance with their respective terms and conditions notwithstanding
any provision of this Agreement.
5. FRINGE BENEFITS:
(a) During the term hereof, commencing on the day and year first
above written, the Corporation shall:
(i) provide the Employee and his immediate family with medical
and hospitalization insurance substantially similar to that
provided for the other executive personnel of the Corporation in
similar management positions,
(ii) reimburse the Employee and his immediate family for dental
expenses incurred each year in excess of $200, including but not
2
3
limited to orthodontics for the Employee's children under the
age of twenty-one (21) years only, provided that the aggregate
amount of such reimbursement in any year shall not exceed $4,000
(such reimbursement shall be in addition to any dental insurance
provided to the Employee and his immediate family under any
dental plan from time to time maintained by the Corporation),
(iii) reimburse the Employee for expenses incurred in connection
with the purchase by Employee of fitness or exercise equipment
or membership in a fitness or exercise program reasonably
acceptable to the Corporation in an aggregate amount equal to
the lesser of (x) seventy-five (75%) percent of all such
expenses each and (y) $500 each year,
(iv) reimburse the Employee for the reasonable and customary
cost of an annual physical examination,
(v) provide to the Employee dependent group medical coverage
upon terms and conditions satisfactory to the Corporation
without charge to the Employee,
(vi) if the Employee is not covered by group long-term
disability insurance in an amount equal to at least 100% of
Employee's base salary, provide to Employee additional long-term
disability insurance in an amount reasonably determined by the
insurer based on the Employee's total earned income and personal
financial circumstances, the cost of such coverage to be
reported by the Corporation as compensation for income tax
purposes on the Employee's Form W-2 each year, and
(vii) provide life insurance in an amount equal to three times
(3X) Employee's base salary.
3
4
(b) The Employee is authorized to incur on behalf of the Corporation
only such reasonable expenses (including travel and entertainment) in connection
with the business of the Corporation as are in conformity with the Corporation's
published guidelines. The Corporation shall reimburse Employee for all such
reasonable expenses incurred in connection with the business of the Corporation
upon the presentation by the Employee, from time to time, of an itemized account
of such expenditures, which account shall be in form and substance in conformity
with the rules and regulations of the Internal Revenue Service. Any single
expenditure in excess of $5,000 shall require the prior approval of the Chief
Operating Officer or the Chief Financial Officer of the Corporation.
(c) During the term hereof, the Corporation shall provide the
Employee with an automobile expense allowance equal to $600.00 per month.
6. DUTIES AND EXTENT OF SERVICES: Upon the execution of this Agreement and
throughout its term, the Employee shall assume the position Vice President,
Sales for the Corporation and shall undertake all of the duties incident to such
office in addition to rendering all such other management duties as may
reasonably be requested. The parties hereto shall take whatever action is
necessary to cause the elections or appointment of the Employee to such
position. The Employee shall exert his best efforts and shall devote his full
time and attention to the affairs of the Corporation. During the term of this
Agreement, the Employee shall not, directly or indirectly, alone or as a member
of a partnership (in the capacity of a general partner) or limited liability
company (in the capacity of a manager), or as an officer, director, significant
shareholder (i.e., owning or holding beneficially or of record 5% or more of the
voting shares of an entity), or employee of any other corporation or entity, be
engaged in or concerned with any other duties or pursuits whatsoever for
pecuniary gain requiring his personal services without the prior written consent
of the Corporation; which consent will not be unreasonably withheld.
4
5
7. VACATION: During each year of the term of this Agreement, the Employee
shall be entitled to four (4) weeks vacation, the time of which shall be subject
to the prior approval of the Chief Operating Officer of the Corporation.
8. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate June 30, 1999 or sooner upon the occurrence
of any of the following events:
(a) The Employee's death;
(b) The Corporation's decision, at its option, to be exercised by
written notice from the Corporation to the Employee, upon the Employee's
incapacity or inability to perform his services as contemplated herein for a
period of at least sixty (60) consecutive days or an aggregate of ninety (90)
consecutive or non-consecutive days during any twelve (12) month period during
the term hereof due to the fact that his physical or mental health shall have
become impaired so as to make it impossible or impractical for him to perform
the duties and responsibilities contemplated for him hereunder; or
(c) The Corporation's decision, at its option, to be exercised by
written notice from the Corporation to the Employee in the event the Employee is
derelict in his duties or commits any misconduct with respect to the
Corporation's affairs and such dereliction or misconduct shall continue for a
period of fifteen (15) days after the Corporation shall have given the Employee
written notice specifying such dereliction or misconduct, and advising him that
the Corporation shall have the right to terminate his employment hereunder in
the event such misconduct continues through such fifteen (15) day period.
(d) In the event that the Employee commits an act constituting
common law fraud or any crime, which could reasonably be expected to have an
adverse impact on the Corporation, its business or assets.
(e) In the event that the Employee should fail (otherwise than on
account of illness or other incapacity) or refuse to carry out the reasonable
directives of the Board of
5
6
Directors of the Corporation, and such failure or refusal shall continue for a
period of fifteen (15) days after the Corporation shall have given the Employee
written notice specifying such directives and wherein the Employee has failed or
refused to carry out the same, and advising him that the Corporation shall have
the right to terminate his employment hereunder in the event such failure or
refusal continues through such fifteen (15) day period.
(f) Cessation of the Corporation's business.
(g) On thirty (30) days' written notice from the Corporation
pursuant to Section 2 hereof. If (i) the Corporation terminates this Agreement
pursuant to Section 2 hereof on thirty (30) days' notice without cause of (ii)
there is a Change in Control (as hereinafter defined) that occurs prior to the
expiration or termination of the Agreement and, within twelve (12) months after
the Change in Control, (A) Employee's employment is terminated by the
Corporation otherwise than for the reasons set forth in Sections (8)(a), (b),
(c), (d), (e), and/or (f) hereof, or (B) Employee terminates his employment for
Good Reason (as hereinafter defined), then Corporation shall pay to Employee as
severance pay a total amount equal to (i) his annual base salary, payable in
twelve (12) equal consecutive monthly installments (without interest) beginning
one (1) month after such termination, plus (ii) the fringe benefits described in
Section 5(a), other than Non-Extendible Benefits as defined below for the twelve
(12) month period commencing on the effective date of such termination, plus
(iii) with respect to any Non-Extendible Benefit, as defined below, the
Corporation shall pay the Employee cash compensation equal to the Corporation's
annual premium or other annual cost basis as determined by the Corporation, of
such Non-Extendible Benefit, payable in twelve (12) equal consecutive monthly
installments (without interest) beginning one (1) month after such termination.
For purposes of this paragraph (g), "Non-Extendible Benefit" shall mean a
fringe benefit described in Section 5(a) for which
6
7
the Corporation's insurance or other provider contracts do not permit an
extension beyond termination of employment.
Employee expressly understands that payment of such severance pay and
benefits (or portion thereof if such payments terminate pursuant to the last
sentence of this paragraph) represents liquidated damages in full and final
settlement of any and all amounts owed by Corporation to Employee under this
Agreement or otherwise except for the accrued portion, if any, of any bonus,
stock option, commission, vacation or other benefit to which Employee is
expressly entitled pursuant to any formal, written plan or agreement maintained
by the Corporation. Notwithstanding the foregoing, if Employee obtains full-time
employment from any person or entity or accepts an engagement as a self-employed
consultant or similar position during such twelve (12) month period, then upon
commencement of any such employment or engagement, the severance pay and
benefits payable under this Section 8(g) shall immediately be and be deemed
reduced by an amount equal to the compensation and/or benefits payable by such
other employment or engagement and the Corporation shall have no further
obligation to Employee under this Agreement or otherwise.
(h) As used in this Agreement, the following terms have the meanings
set forth below:
(i) "Affiliate" of a person means any person directly or
indirectly controlling, controlled by or under common control
with the first person.
(ii) "Associate" has the meaning ascribed thereto in Rule 12b-2
under the Exchange Act as in effect on the date hereof.
(iii) "Change in Control" means the occurrence of any of the
following events:
(A) A consolidation, merger, combination or other transaction
between Parent or Corporation, and any other corporation or
other
7
8
legal entity (other than an Affiliate of Parent or Corporation)
in which shares of common stock of Parent or Corporation are
exchanged for or changed into other stock or securities, cash
and/or other property, if, as a result of such transaction, less
than 20% of the combined voting power of the common stock (or
other securities entitles to vote generally in the election of
directors) of the surviving or resulting entity is beneficially
owned (as hereinafter defined) by the beneficial owners of the
Parent's or Corporation's common stock as the case may be as of
the date hereof ("Current Shareholders") and the number of
persons serving on the Board of Directors of the surviving or
resulting entity who are Affiliates, Associates, designees or
nominees of any single "person" (as defined in Section 13(d)(3)
of the Exchange Act) other than the Current Shareholders is
greater than the number of persons serving on such Board of
Directors who are Affiliates, Associates, designees or nominees
of the Current Shareholders;
(B) A sale of all or at least 80% (measured by book value as of
the most recent annual or quarterly balance sheet) of the assets
of Parent or Corporation to another corporation or other legal
entity (other than one of the Current Shareholders or any
Affiliate of Parent or Corporation); and
(C) A sale or other disposition of shares of common stock of
Parent or Corporation by the Current Shareholders to any
corporation or other legal entity (other than one of the Current
Shareholders or any Affiliate of Parent or Corporation) as a
result of which less than 20% of the then outstanding common
stock of Parent or Corporation is beneficially owned (as
hereinafter
8
9
defined) by the Current Shareholders and the number of persons
serving on Parent's or Corporation's Board of Directors who are
Affiliates, Associates, designees or nominees of any single
"person" (as defined in Section 13(d)(3) of the Exchange Act)
other than the Current Shareholders is greater than the number
of persons serving on Parent's or Corporation's Board of
Directors who are Affiliates, Associates, designees or nominees
of the Current Shareholders. Beneficial ownership will be
determined by applying the definition set forth in Rule 13d-3
under the Exchange Act as in effect on the date hereof. Also,
for purposes of this Agreement, any person who, on the date on
which a Change in Control occurs, is serving on Parent's or
Corporation's Board of Directors will be deemed to be an
Affiliate, Associate, designee or nominee of the Current
Shareholders after the Change in Control for as long as such
person serves as a director of Parent or Corporation or of any
entity that survives or results from a transaction described in
Section 8(h)(iii).
(iv) "Corporation" includes any successor to all or
substantially all of the business or assets of the Corporation.
(v) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(vi) "Good Reason" means that, following a Change in Control and
without Employee's written consent,
(A) there has been a material and significant adverse change in
the nature or scope of Employee's authority, duties or
responsibilities in effect immediately prior to the Change in
Control;
(B) there has been a reduction in Employee's annual base salary
in effect immediately prior to the Change in Control or an
adverse
9
10
change in Employee's total compensation such that Employee's
compensation and benefits in the aggregate are not materially
comparable to his aggregate compensation and benefits in effect
immediately prior to the Change in Control; or
(C) the principal place of Employee's employment is relocated to
a place that is more than 25 miles from the principal place of
Employee's employment immediately prior to the Change in Control
or Employee is required to be away from his office in the course
of discharging his duties and responsibilities materially and
significantly more than was required prior to the Change in
Control.
In the event of any termination (other than by the Corporation without
cause on thirty (30) days' notice pursuant to Section 2), the Corporation shall
pay to the Employee such portion of his annual base salary payable to the date
such termination becomes effective (reduced by an amount payable pursuant to any
disability insurance policies), and thereafter the Employee shall have no claim
for any further compensation hereunder, provided, however, that in the event of
the Employee's death, his death shall be deemed to have occurred on the last day
of the month in which he dies. Upon any termination, Employee shall also receive
all benefits to which he is entitled under the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"), provided that if the Employee is entitled to
receive severance and fringe benefits described in Section 8(g), COBRA benefits
shall commence at the expiration of the twelve (12) months (or such shorter
period) as is provided in such Section.
9. RESTRICTIONS ON THE EMPLOYEE: During the period commencing on the date
hereof and ending two (2) years after the termination of the Employee's
employment by the Corporation for any reason, the Employee shall not directly or
indirectly induce or attempt to induce any of the employees of the Corporation
to
10
11
leave the employ of the Corporation. If this Agreement is terminated by the
Corporation pursuant to Section 2 hereof, the foregoing two (2) year period
shall be reduced to one (1) year.
10. COVENANT NOT TO COMPETE: During the period commencing on the date
hereof, and ending two (2) years after the termination of the Employee's
employment for any reason, the Employee shall not, except as a passive investor
in publicly held companies, engage in, or own or control any interest in, or act
as principal, director, officer or employee of, or consultant to, any firm or
corporation which is in competition with the Corporation or its Parent. If this
Agreement is terminated by the Corporation pursuant to Section 2 hereof, the
foregoing two (2) year period shall be reduced to one (1) year.
11. PROPRIETARY INFORMATION
(a) For purposes of this Agreement, "proprietary information" shall
mean any proprietary information relating to the business of the Corporation or
its parent or any entity in which the Corporation or its Parent has a
controlling interest that has not previously been publicly released by duly
authorized representatives of the Corporation and shall include (but shall not
be limited to) information encompassed in all proposals, marketing and sales
plan, financial information, costs, pricing information, computer programs
(including without limitation source code, object code, algorithms and models),
customer information, customer lists, and all methods, concepts, know-how or
ideas in or reasonably related to the business of Corporation or any entity in
which the Corporation has a controlling interest. The Employee agrees to regard
and preserve as confidential all proprietary information, whether he has such
information in his memory or in writing or other tangible or intangible form.
The Employee will not, without written authority from the Corporation to do so,
directly or indirectly, use for his benefit or purposes, or disclose to others,
either during the term of this employment hereunder or thereafter, any
proprietary
11
12
information except as required by the conditions of his employment hereunder or
pursuant to court order (in which case Employee shall give the Corporation
prompt written notice [not less than 24 hours] so that the Corporation may seek
a protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. The Employee agrees not to remove from the
premises of the Corporation or any subsidiary or affiliate of the Corporation,
except as an employee of the Corporation in pursuit of the business of the
Corporation or any of its subsidiaries, affiliates or any entity in which the
Corporation has a controlling interest, or except as specifically permitted in
writing by the Corporation, any document or object containing or reflecting any
proprietary information. The Employee recognizes that all such documents and
objects, whether developed by him or by someone else, are the exclusive property
of the corporation. Proprietary information shall not include information which
is presently in the public domain or which comes into the public domain through
no fault of the Employee or which is disclosed to the Employee by a third party
lawfully in possession of such information with a right to disclose same.
(b) All proprietary information and all of the Employee's interest
in trade secrets, trademarks, computer programs, customer information, customer
lists, employee lists, products, procedures, copyrights, patents and
developments hereafter to the end of the period of employment hereunder
developed by the Employee as a result of, or in connection with, his employment
hereunder, shall belong to the Corporation; and without further compensation,
but at the Corporation's expense, forthwith upon request of the corporation,
Employee shall execute any and all such assignments and other documents and take
any and all such other action as Corporation may reasonably request in order to
vest in Corporation all the Employee's rights, title and interests to and in all
of the aforesaid items, free and clear of liens, charges and encumbrances.
12
13
(c) The Employee expressly agrees that the covenants set forth in
Sections 9, 10, and 11 of this Agreement are being given to Corporation in
connection with the employment of the Employee by Corporation and that such
covenants are intended to protect Corporation against the competition by the
Employee, within the terms stated, to the fullest extent deemed reasonable and
permitted in law and equity. In the event that the foregoing limitations upon
the conduct of the Employee are beyond those permitted by law, such limitations,
both as to time and geographical area, shall be, and be deemed to be, reduced in
scope and effect to the maximum extent permitted by law.
12. INJUNCTIVE RELIEF: The Employee acknowledges that the injury to the
Corporation resulting from any violation by him of any of the covenants
contained in this Agreement will be of such a character that it cannot be
adequately compensated by money damages, and, accordingly, the Corporation may,
in addition to pursuing its other remedies, obtain an injunction from any court
having jurisdiction of the matter restraining any such violation.
13. REPRESENTATION OF EMPLOYEE: The Employee represents and warrants that
neither the execution and delivery of this Agreement nor the performance of his
duties hereunder violates the provisions of any other agreement to which he is a
party or by which he is bound.
14. PARTIES; NONASSIGNABILITY: As used herein, the term "Corporation" shall
mean and include the Corporation, its Parent and any subsidiary thereof and any
successor thereto unless the context indicates otherwise. Any assignment of this
Agreement shall be subject to the provisions of Section 8(g). This Agreement and
all rights hereunder are personal to the Employee and shall not be assignable by
him and any purported assignment shall be null and void and shall not be binding
by the Corporation.
15. ENTIRE AGREEMENT: This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated herein
13
14
and supersedes all previous representations, negotiations, commitments, and
writing with respect hereto.
16. AMENDMENT OR ALTERATION: No amendment or alteration of the terms of this
Agreement shall be valid unless made in writing and signed by all of the parties
hereto.
17 CHOICE OF LAW: This Agreement shall be governed by the laws of the State
of Connecticut.
18. ARBITRATION: Any controversy, claim or breach arising out of or relating
to this Agreement or the breach thereof shall be settled by arbitration in
Stamford, Connecticut in accordance with the rules of the American Arbitration
Association and the judgment upon the award rendered shall be entered by consent
in any court having jurisdiction thereof.
19. NOTICES: Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by registered mail to
the residence of the Employee, or to the principal office of the Corporation,
respectively.
20. WAIVER OF BREACH: The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any of the parties hereto.
21. BINDING EFFECT: The terms of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective personal
representatives, heirs, administrators, successors, and permitted assigns.
22. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
14
15
CORPORATION:
Hyperion Software
By:
--------------------------------------
Xxxxx XxXxxxxxxxxx
President and Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------
Xxxxxxx X. Xxxxxxxxx
15
