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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into on August 24, 1998, by and between
XXXXXXX XXXXX (the "Employee") and HYPERION SOLUTIONS CORPORATION, a Delaware
corporation (the "Company").
1. EFFECTIVE DATE.
This Agreement shall be effective at the effective time (the
"Effective Time") of the merger (the "Merger") contemplated by the Agreement and
Plan of Merger dated May 25, 1998, among Hyperion Software Corporation
("Hyperion"), the Company and HSC Merger Corp. This Agreement shall be null and
void if the Merger does not occur.
2. DUTIES AND SCOPE OF EMPLOYMENT.
(a) POSITION. For the term of his employment under this
Agreement ("Employment"), the Company agrees to employ the Employee in the
position of Vice President-Product Marketing or in such other vice president
position as the Company subsequently may assign to the Employee. The Employee
shall report to the Company's Senior Vice President of Marketing or to such
other person as the Company subsequently may determine.
(b) OBLIGATIONS TO THE COMPANY. During the term of his
Employment, the Employee shall devote his full business efforts and time to the
Company. During the term of his Employment, without the prior written approval
of the Company's Senior Vice President of Marketing, the Employee shall not
render services in any capacity to any other person or entity and shall not act
as a sole proprietor or partner of any other person or entity or as a
shareholder owning more than five percent of the stock of any other corporation.
The Employee shall comply with the Company's policies and rules, as they may be
in effect from time to time during the term of his Employment.
(c) NO CONFLICTING OBLIGATIONS. The Employee represents and
warrants to the Company that he is under no obligations or commitments, whether
contractual or otherwise, that are inconsistent with his obligations under this
Agreement. The Employee represents and warrants that he will not use or
disclose, in connection with his employment by the Company, any trade secrets or
other proprietary information or intellectual property in which he or any other
person has any right, title or interest and that his employment by the Company
as contemplated by this Agreement will not infringe or violate the rights of any
other person. The Employee represents and warrants to the Company that he has
returned all property and confidential information belonging to any prior
employer.
3. CASH AND INCENTIVE COMPENSATION.
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(a) SALARY. The Company shall pay the Employee as compensation
for his services a base salary at a gross annual rate of not less than $190,000.
Such salary shall be payable in accordance with the Company's standard payroll
procedures. (The annual compensation specified in this Subsection (a), together
with any increases in such compensation that the Company may grant from time to
time, is referred to in this Agreement as "Base Compensation.") The rate of Base
Compensation specified in this Subsection (a) shall be effective as of July 1,
1998. Within five business days after the Effective Time, the Company shall pay
the Employee a lump sum equal to the difference between the Base Compensation
specified in this Subsection (a) and the base salary actually received by the
Employee for the period from July 1, 1998, to the Effective Time from Hyperion
Software Operations Inc.
(b) INCENTIVE BONUSES. The Employee shall be eligible to be
considered for an annual incentive bonus with a target amount equal to 40% of
his Base Compensation. Such bonus (if any) shall be awarded based on objective
or subjective criteria established in advance by the Company's Board of
Directors (the "Board"). The determinations of the Board with respect to such
bonus shall be final and binding. The foregoing notwithstanding, the incentive
bonus for the period from July 1, 1998, to June 30, 1999, shall in no event be
less than $76,000.
(c) RELOCATION EXPENSES. The Company shall pay for up to five
round trips for the Employee and up to three round trips for the Employee's
family between the Stamford area and the Silicon Valley area to facilitate the
Employee's search for a home. The Company shall reimburse the reasonable
expenses, not to exceed $25,000, that the Employee incurs for the customary
closing costs in connection with the sale of his home in the Stamford area and
in moving himself, his family and his household from the Stamford area to the
Silicon Valley area. The Company shall reimburse the Employee for customary
commissions paid in connection with the sale of his home in the Stamford area in
an amount up to six percent (6%) of the sale price of his home and for the
reasonable and customary closing costs in connection with the purchase of a home
in the Silicon Valley area, including mortgage points not to exceed three points
but excluding prepaid interest, taxes or insurance and similar prepaid items.
The Company shall reimburse the Employee for one month's reasonable and
customary temporary living expenses up to $4,500. To the extent that the
Company's payments under this Subsection (c) are includible in the Employee's
taxable income, the Company shall increase such payments by an additional amount
calculated to ensure that the Employee's net proceeds, after paying federal and
state income taxes on such payments and such additional amount, are equal to the
Employee's expenses described in this Subsection (c).
(d) STOCK OPTIONS. The Employee acknowledges that Hyperion has
granted him options to purchase 20,000 shares of its Common Stock, contingent
upon the consummation of the Merger. Pursuant to the Merger, such options will
be converted into 19,000 options to purchase shares of the Common Stock of the
Company.
4. HOME LOAN.
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(a) AMOUNT AND TERMS OF LOAN. Upon the Employee's request at any
time after the Effective Time, the Company shall extend a loan to the Employee
in an amount not to exceed $200,000 (the "Loan"). The Loan shall not bear
interest. The term of the Loan shall be 10 years, except that the Loan shall be
payable in full in the event that the Employee resigns his Employment or his
Employment is terminated by the Company for Cause (as defined in Subsection (d)
below). Subject to Subsection 4(b) below, the Loan shall be forgiven, in part or
in full, in the event that:
(i) The Company is subject to a Change in Control (as
defined in Subsection (e) below), not including the Merger, within five
years after the Effective Time; and
(ii) The Employee is subject to an Involuntary
Termination (as defined in Subsection (f) below) within 12 months after
such Change in Control; or
(iii) The Employee is terminated without Cause (as defined
in Subsection (d) below) within five years after the Effective Time.
To the extent that the forgiveness of the Loan, in part or in full, under this
Subsection (a) results in taxable income to the Employee, the Company shall pay
to the Employee an additional amount as is necessary (after taking into account
all federal, state and local income taxes payable by the Employee as a result of
the forgiveness of the Loan, in part or in full) to place the Employee in the
same after-tax position (including federal, state and local taxes) as the
Employee would have been in had no such tax been paid or incurred.
No payments shall be required under the Loan during the first five years of its
term. The Loan shall be fully repaid in 60 equal monthly installments during the
sixth through tenth years of its term. Loan payments shall be due on the first
day of each month at the Company's principal executive offices. The Loan shall
be secured by a deed of trust on the Employee's principal residence. Such deed
of trust shall be subordinated only to a first deed of trust. The Employee
hereby represents that he will itemize deductions for federal and state income
tax purposes during the term of the Loan.
(b) LOAN FORGIVENESS. The Loan shall be forgiven, in part or
in full, pursuant to Subsections 4(a)(i) and (ii) or Subsection 4(a)(iii) above
only if the sum of the following amounts is less than $200,000:
(i) The after-tax amount (less applicable taxes) equal
to the fair market value of the Employee's principal residence less the
Employee's basis in such residence (as calculated for tax purposes); plus
(ii) The Employee's aggregate after-tax gain (less
applicable taxes) from the stock options described in Section 3(d)
(together, the "After-Tax Gain").
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The Loan shall be forgiven as to an amount equal to the excess of the
outstanding balance of the Loan (on the date of termination under Subsections
4(a)(i) and (ii) or Subsection 4(a)(iii) above) over the After-Tax Gain,
provided that in no event shall the Loan be forgiven as to an amount that is
greater than the outstanding balance of the Loan at the relevant termination
date. For example, if the sum of Subsections 4(b)(i) and (ii) is equal to
$150,000 and the outstanding Loan balance is equal to $200,000, then the Loan
shall be forgiven as to $50,000 ($200,000-150,000).
The fair market value of the Employee's residence shall be determined by a
qualified professional real estate appraiser satisfactory to the Employee and
the Company. In the event that the Employee sells his principal residence and
purchases another principal residence or in the event that the Employee improves
his principal residence, his basis shall be calculated pursuant to the rules
that would apply to the calculation of the taxable gain from the sale of such
residence. In the event that the fair market value of the Employee's residence
is less than the Employee's basis in such residence, calculated according to the
procedure above, then such depreciation shall be considered a negative amount
for Subsection 4(b)(i) to be added to the amount in Subsection 4(b)(ii). The
Employee's aggregate gain from the stock options described in Section 3(d) shall
be deemed to be equal to the excess of the market value of the underlying shares
over the exercise price, measured on the date when such excess is greatest
during the Measurement Period for each vested installment of options. The
"Measurement Period" shall commence on the earliest date when a particular
installment of such options is vested and shall end on the date of the
Employee's termination pursuant to Subsections 4(a)(i) and (ii) or 4(a)(iii), as
applicable.
(c) RENEGOTIATION. The Loan shall be renegotiated in good faith
within a reasonable time following the fifth anniversary of the Effective Time
if, as of such anniversary, the sum of the following amounts is less than
$200,000:
(i) The after-tax amount (less applicable taxes) equal
to the fair market value of the Employee's principal residence less the
Employee's basis in such residence (as calculated for tax purposes); plus
(ii) The Employee's aggregate after-tax gain (less
applicable taxes) from the stock options described in Section 3(d)
(together, the "After-Tax Gain").
The Loan shall be renegotiated as to an amount equal to the excess of the
outstanding balance of the Loan (on the fifth anniversary of the Effective Time)
over the After-Tax Gain, provided that in no event shall the Loan be
renegotiated as to an amount that is greater than the outstanding balance of the
Loan at the relevant anniversary date. For example, if the sum of Subsections
4(c)(i) and (ii) is equal to $150,000 and the outstanding Loan balance is equal
to $200,000, then the Loan shall be renegotiated as to $50,000
($200,000-150,000).
The fair market value of the Employee's residence shall be determined by a
qualified professional real estate appraiser satisfactory to the Employee and
the Company. In the event that the Employee sells his principal residence and
purchases another principal residence or in the event that the Employee improves
his principal residence, his basis shall be calculated pursuant to the rules
that
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would apply to the calculation of the taxable gain from the sale of such
residence. In the event that the fair market value of the Employee's residence
is less than the Employee's basis in such residence, calculated according to the
procedure above, then such depreciation shall be considered a negative amount
for Subsection 4(c)(i) to be added to the amount in Subsection 4(c)(ii). The
Employee's aggregate gain from the stock options described in Section 3(d) shall
be deemed to be equal to the excess of the market value of the underlying shares
over the exercise price, measured on the date when such excess is greatest
during the Measurement Period for each vested installment of options. The
"Measurement Period" shall commence on the earliest date when a particular
installment of such options is vested and shall end on the fifth anniversary of
the Effective Time.
(d) DEFINITION OF "CAUSE." For all purposes under this Agreement,
"Cause" shall mean:
(i) Unauthorized use or disclosure of the confidential
information or trade secrets of the Company;
(ii) Any breach of this Agreement, the Proprietary
Information and Inventions Agreement between the Employee and the Company,
or any other agreement between the Employee and the Company;
(iii) Conviction of, or a plea of "guilty" or "no contest"
to, a felony under the laws of the United States or any state thereof;
(iv) Threats or acts of violence directed at any present,
former or prospective employee, independent contractor, vendor, customer or
business partner of the Company;
(v) The sale, possession or use of illegal drugs on the
premises of the Company;
(vi) Misappropriation of the assets of the Company or
other acts of dishonesty;
(vii) Illegal or unethical business practices;
(viii) Misconduct or gross negligence in the performance of
duties assigned to the Employee under this Agreement;
(ix) Failure to perform reasonable duties assigned to the
Employee under this Agreement; or
(x) Failure to comply with the Company's policies or
rules, as they may be in effect from time to time during the term of the
Employee's Employment.
The foregoing shall not be deemed an exclusive list of all acts or omissions
that the Company may consider as grounds for the termination of the Employee's
Employment.
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(e) DEFINITION OF "CHANGE IN CONTROL." For all purposes under
this Agreement, "Change in Control" shall mean:
(i) The consummation of a merger or consolidation of the
Company with or into another entity or any other corporate reorganization,
if more than 50% of the combined voting power of the continuing or
surviving entity's securities outstanding immediately after such merger,
consolidation or other reorganization is owned by persons who were not
stockholders of the Company immediately prior to such merger,
consolidation or other reorganization;
(ii) The sale, transfer or other disposition of all or
substantially all of the Company's assets;
(iii) A change in the composition of the Board, as a
result of which fewer than 50% of the incumbent directors are directors who
either (A) had been directors of the Company on the date 36 months prior to
the date of the event that may constitute a Change in Control (the
"original directors") or (B) were elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
aggregate of the original directors who were still in office at the time of
the election or nomination and the directors whose election or nomination
was previously so approved; or
(iv) Any transaction as a result of which any person is
the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended), directly or indirectly, of securities of
the Company representing at least 50% of the total voting power represented
by the Company's then outstanding voting securities. For purposes of this
Paragraph (iv), the term "person" shall have the same meaning as when used
in sections 13(d) and 14(d) of such Act but shall exclude (A) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or of a parent or subsidiary of the Company and (B) a corporation
owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the common stock
of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
(f) DEFINITION OF "INVOLUNTARY TERMINATION." For all purposes
under this Agreement, "Involuntary Termination" shall mean the termination of
the Employee's Employment by reason of:
(i) The involuntary discharge of the Employee by the
Company for reasons other than Cause; or
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(ii) The voluntary resignation of the Employee following
a change in his position with the Company that materially reduces his level
of authority or responsibility or a material demotion in his title and
position.
5. VACATION AND EMPLOYEE BENEFITS. During the term of his
Employment, the Employee shall be eligible for 20 days of paid vacation per
fiscal year subject to the provisions of the Company's standard policy, as it
may be amended from time to time. During the term of his Employment, the
Employee shall be eligible to participate in any employee benefit plans
maintained by the Company for similarly situated employees, subject in each case
to the generally applicable terms and conditions of the plan in question and to
the determinations of any person or committee administering such plan.
6. BUSINESS EXPENSES. During the term of his Employment, the
Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties
hereunder. The Company shall reimburse the Employee for such expenses upon
presentation of an itemized account and appropriate supporting documentation,
all in accordance with the Company's generally applicable policies.
7. TERM OF EMPLOYMENT.
(a) BASIC RULE. The Company agrees to continue the Employee's
Employment, and the Employee agrees to remain in Employment with the Company,
from the Effective Time until the date when the Employee's Employment terminates
pursuant to Subsection (b) or (c) below. The Employee's Employment with the
Company shall be "at will." Any contrary representations which may have been
made to the Employee shall be superseded by this Agreement. This Agreement shall
constitute the full and complete agreement between the Employee and the Company
on the "at will" nature of the Employee's Employment, which may only be changed
in an express written agreement signed by the Employee and a duly authorized
officer of the Company.
(b) TERMINATION. The Company may terminate the Employee's
Employment at any time and for any reason (or no reason), and with or without
Cause, by giving the Employee notice in writing. The Employee may terminate his
Employment by giving the Company 14 days' advance notice in writing. The
Employee's Employment shall terminate automatically in the event of his death.
(c) PERMANENT DISABILITY. The Company may terminate the
Employee's active Employment due to Permanent Disability by giving the Employee
notice in writing. For all purposes under this Agreement, "Permanent Disability"
shall mean that the Employee, at the time notice is given, has failed to perform
his duties under this Agreement for not less than 60 consecutive days, or not
less than 90 days in the aggregate during any 12-month period, as the result of
his incapacity due to physical or mental injury, disability or illness.
(d) RIGHTS UPON TERMINATION. Except as expressly provided in
Section 8, upon the termination of the Employee's Employment pursuant to this
Section 7, the Employee shall only be entitled to the compensation, benefits and
reimbursements described in
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Sections 3, 5 and 6 for the period preceding the effective date of the
termination. The payments under this Agreement shall fully discharge all
responsibilities of the Company to the Employee.
(e) TERMINATION OF AGREEMENT. This Agreement shall terminate
when all obligations of the parties hereunder have been satisfied. The
termination of this Agreement shall not limit or otherwise affect any of the
Employee's obligations with respect to the loan described in Section 4 or the
Employee's obligations under Section 9.
8. TERMINATION BENEFITS.
(a) GENERAL RELEASE. Any other provision of this Agreement
notwithstanding, Subsections (b) and (c) below shall not apply unless the
Employee (i) has executed a general release (in a form prescribed by the
Company) of all known and unknown claims that he may then have against the
Company or persons affiliated with the Company and (ii) has agreed not to
prosecute any legal action or other proceeding based upon any of such claims.
(b) SEVERANCE PAY. If, the Company terminates the Employee's
Employment for any reason other than Cause or Permanent Disability, then the
Company shall pay the Employee his Base Compensation less any compensation
received from another employer or as a self-employed consultant or similar
position for a period following the termination of his Employment (the
"Continuation Period"). The Continuation Period shall be equal to twelve (12)
months. Such Base Compensation shall be paid at the rate in effect at the time
of the termination of Employment and in accordance with the Company's standard
payroll procedures.
(c) HEALTH INSURANCE. If Subsection (b) above applies, and if
the Employee elects to continue his health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA") following the
termination of his Employment, then the Company shall pay the Employee's monthly
premium under COBRA until the close of the Continuation Period.
9. EMPLOYEE'S COVENANTS.
(a) NON-SOLICITATION. During the period commencing on the date of
this Agreement and continuing until the second anniversary of the date when the
Employee's Employment terminated for any reason, the Employee shall not directly
or indirectly, personally or through others, solicit or attempt to solicit (on
the Employee's own behalf or on behalf of any other person or entity) either (i)
the employment of any employee of the Company or any of the Company's affiliates
or (ii) the business of any customer of the Company or any of the Company's
affiliates with whom the Employee had contact during his Employment. During such
period, the Employee shall not encourage or induce, or take any action that has
the effect of encouraging or inducing, any employee of the Company or any of the
Company's affiliates to terminate his or her employment.
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(b) NON-DISCLOSURE. The Employee has entered into a Proprietary
Information and Inventions Agreement with the Company, which is incorporated
herein by reference.
(c) NON-COMPETITION. If Section 8(b) applies, the Employee
during the Continuation Period shall not, directly or indirectly (other than on
behalf of the Company or with the Company's prior written consent), engage in a
Competitive Business Activity. The term "Competitive Business Activity" shall
mean:
(i) Engaging in, or managing or directing persons
engaged in, any business in which the Company or any of the Company's
affiliates is engaged at the time of the termination of the Employee's
Employment, whether independently or as an employee, agent, consultant,
advisor, independent contractor, proprietor, partner, officer, director or
otherwise;
(ii) Acquiring or having an ownership interest in any
entity that derives more than 15% of its gross revenues from any business
in which the Company or any of the Company s affiliates is engaged at the
time of the termination of the Employee's Employment, except for ownership
of one percent or less of any entity whose securities are freely tradable
on an established market; or
(iii) Participating in the financing, operation,
management or control of any firm, partnership, corporation, entity or
business described in Paragraph (ii) above.
10. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. This Agreement shall be binding upon
any successor (whether direct or indirect and whether by purchase, lease,
merger, consolidation, liquidation or otherwise) to all or substantially all of
the Company's business and/or assets. For all purposes under this Agreement, the
term "Company" shall include any successor to the Company's business and/or
assets which becomes bound by this Agreement.
(b) EMPLOYEE'S SUCCESSORS. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
11. MISCELLANEOUS PROVISIONS.
(a) NOTICE. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered mail, return receipt
requested and postage prepaid. In the case of the Employee, mailed
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notices shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Secretary.
(b) MODIFICATIONS AND WAIVERS. No provision of this Agreement
shall be modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Employee and by an
authorized officer of the Company (other than the Employee). No waiver by either
party of any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.
(c) WHOLE AGREEMENT. This Agreement supersedes any prior
employment agreement between the Employee and the Company, Hyperion or a
subsidiary of Hyperion. No other agreements, representations or understandings
(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof. This Agreement and the Proprietary
Information and Inventions Agreement contain the entire understanding of the
parties with respect to the subject matter hereof.
(d) WITHHOLDING TAXES. All payments made under this Agreement
shall be subject to reduction to reflect taxes or other charges required to be
withheld by law.
(e) CHOICE OF LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California (except their provisions governing the choice of law).
(f) SEVERABILITY. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(g) ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, or the Employee's Employment
or the termination thereof, shall be settled in Santa Xxxxx County, California,
by arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The decision of the
arbitrator shall be final and binding on the parties, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The parties hereby agree that the arbitrator shall be empowered to
enter an equitable decree mandating specific enforcement of the terms of this
Agreement. The Company and the Employee shall share equally all fees and
expenses of the arbitrator; provided, however, that the Company or the Employee,
as the case may be, shall bear all fees and expenses of the arbitrator and all
of the legal fees and out-of-pocket expenses of the other party if the
arbitrator determines that the claim or position of the Company or the Employee,
as the case may be, was without reasonable foundation. The Employee hereby
consents to personal jurisdiction of the state and federal courts located in the
State of California for any action or proceeding arising from or relating to
this Agreement or relating to any arbitration in which the parties are
participants.
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(h) NO ASSIGNMENT. This Agreement and all rights and obligations
of the Employee hereunder are personal to the Employee and may not be
transferred or assigned by the Employee at any time. The Company may assign its
rights under this Agreement to any entity that assumes the Company's obligations
hereunder in connection with any sale or transfer of all or a substantial
portion of the Company's assets to such entity.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.
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HYPERION SOLUTIONS CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
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Title: Sr. Vice President and CFO
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Employee:
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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