INFORMATION ADVANTAGE SOFTWARE, INC.
SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of November 10, 1997, by and between
[executive](the "Executive"), and INFORMATION ADVANTAGE SOFTWARE, INC.,
Delaware corporation (the "Company").
WHEREAS, the Executive is employed by the Company; and
WHEREAS, pursuant to the terms of the Company's 1992 Stock Option Plan and
Stock Option Agreements between the Company and the Executive, the Company has
granted to the Executive options to purchase shares of its common stock (the
"Options"); and
WHEREAS, the Company desires to provide for accelerated vesting of the
Options upon the occurrence of certain events.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall remain in effect from the
date hereof until the earlier of:
(a) The date when the Executive's employment with the Company
terminates for any reason not described in Section 5(a); or
(b) The date when the Company has met all of its obligations under
this Agreement following a termination of the Executive's employment with
the Company for a reason described in Section 5(a).
2. DEFINITION OF CHANGE IN CONTROL. For purposes of this Agreement,
"Change in Control" shall mean the occurrence of any of the following events
after the date of this Agreement:
(a) 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;
(b) The sale, transfer or other disposition of all or substantially
all of the Company's assets;
(c) A change in the composition of the Board, as a result of which
fewer than 66% of the incumbent directors are directors who either (i) had
been directors of the Company on the date 24 months prior to the date of
the event that may constitute a Change in Control (the "original
directors") or (ii) 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
(d) Any transaction as a result of which any person is the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
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 Subsection (d), the term "person"
shall have the same meaning as when used in sections 13(d) and 14(d) of the
Exchange Act but shall exclude (i) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or of subsidiary
of the Company and (ii) 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.
3. DEFINITION OF GOOD REASON. For purposes of this Agreement, "Good
Reason" shall mean that the Executive:
(i) Has incurred a material reduction in his authority or
responsibilities as an employee of the Company, including (without
limitation) a material reduction or elimination of his authority to
approve expenditures or to hire, promote, demote or terminate
subordinates;
(ii) Has incurred a reduction in his base salary, other than
pursuant to a Company-wide reduction of salaries for employees of the
Company generally;
(iii) Has incurred a material reduction in his opportunity to
earn a cash bonus, other than pursuant to a reduction of bonus
opportunities for executives of the Company generally; or
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(iv) Has been notified that his principal place of work as an
employee of the Company will be relocated by a distance of 30 miles or
more.
4. DEFINITION OF CAUSE. For purposes of this Agreement, "Cause" shall
mean:
(a) The unauthorized use or disclosure of the confidential
information or trade secrets of the Company, which use or disclosure causes
material harm to the Company;
(b) Conviction of, or a plea of "guilty" or "no contest" to, a felony
under the laws of the United States or any state thereof;
(c) Gross negligence; or
(d) Continued failure to perform assigned duties after receiving
written notification from the Board of Directors.
The foregoing, however, shall not be deemed an exclusive list of all acts or
omissions that the Company (or a subsidiary of the Company) may consider as
grounds for the discharge of the Employee.
5. CONDITIONS FOR ACCELERATED VESTING OF STOCK OPTIONS.
(a) TERMINATION OF EMPLOYMENT. The Executive shall be entitled to
the accelerated vesting of stock options described in Section 6 if one of
the following events occurs:
(i) If after a Change in Control, the Executive voluntarily
resigns his employment for Good Reason; or
(ii) If after a Change in Control, the Company terminates the
Executive's employment for any reason other than Cause.
(b) POOLING OF INTERESTS. Subsection (a) above notwithstanding, if
the Company and the other party to the transaction constituting a Change in
Control agree that such transaction is to be treated as a "pooling of
interests" for financial reporting purposes, and if such transaction in
fact is so treated, then the accelerated vesting of stock options described
in Section 6 shall not occur to the extent that the Company's independent
public accountants and such other party's independent public accountants
separately determine in good faith that such acceleration would preclude
the use of "pooling of interests" accounting.
6. SCOPE OF ACCELERATED VESTING OF STOCK OPTIONS. If the conditions
described in Section 5 are satisfied, then the Executive's stock options shall
vest as follows:
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(a) All options to purchase shares of the Company's Common Stock held
by the Executive at the time of his employment termination shall
immediately become exercisable in full, whether such options were granted
before or after the date of this Agreement.
(b) All shares of the Company's Common Stock held by the Executive at
the time of his employment termination shall immediately vest in full and
the Company's right to repurchase such shares shall lapse, whether such
shares were issued before or after the date of this Agreement.
To the extent provided in this Section 6, this Agreement shall be deemed to be
an amendment of the exercisability and vesting provisions of all stock option
agreements, stock purchase agreements and similar instruments executed by the
Executive and the Company.
7. LIMITATION ON PAYMENTS.
(a) BASIC RULE. Any other provision of this Agreement
notwithstanding, the Company shall not be required to make any payment or
property transfer to, or for the benefit of, the Executive (under this
Agreement or otherwise) that would be nondeductible by the Company by
reason of section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), or that would subject the Executive to the excise tax
described in section 4999 of the Code. All calculations required by this
Section 7 shall be performed by the independent auditors retained by the
Company most recently prior to the Change in Control (the "Auditors"),
based on information supplied by the Company and the Executive, and shall
be binding on the Company and the Executive. All fees and expenses of the
Auditors shall be paid by the Company.
(b) REDUCTIONS. If the amount of the aggregate payments or property
transfers to the Executive must be reduced under this Section 7, then the
Executive shall direct in which order the payments or transfers are to be
reduced, but no change in the timing of any payment or transfer shall be
made without the Company's consent. As a result of uncertainty in the
application of sections 280G and 4999 of the Code at the time of an initial
determination by the Auditors hereunder, it is possible that a payment will
have been made by the Company that should not have been made (an
"Overpayment") or that an additional payment that will not have been made
by the Company could have been made (an "Underpayment"). In the event that
the Auditors, based upon the assertion of a deficiency by the Internal
Revenue Service against the Company or the Executive that the Auditors
believe has a high probability of success, determine that an Overpayment
has been made, such Overpayment shall be treated for all purposes as a loan
to the Executive that he shall repay to the Company, together with interest
at the applicable federal rate specified in section 7872(f)(2) of the Code;
provided, however, that no amount shall be payable by the Executive to the
Company if and to the extent that such payment would not reduce the amount
that is nondeductible
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under section 280G of the Code or is subject to an excise tax under section
4999 of the Code. In the event that the Auditors determine that an
Underpayment has occurred, such Underpayment shall promptly be paid or
transferred by the Company to, or for the benefit of, the Executive,
together with interest at the applicable federal rate specified in section
7872(f)(2) of the Code.
8. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. The Company shall require 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, by an agreement in substance and form
satisfactory to the Executive, to assume this Agreement and to agree
expressly to perform this Agreement in the same manner and to the same
extent as the Company would be required to perform it in the absence of a
succession. For all purposes under this Agreement, the term "Company"
shall include any successor to the Company's business and/or assets which
executes and delivers the assumption agreement described in this Subsection
(a) or which becomes bound by this Agreement by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement and all rights of the
Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
9. 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 or
certified mail, return receipt requested and postage prepaid. In the case
of the Executive, mailed 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) WAIVER. 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 Executive and by an authorized officer of the
Company (other than the Executive). 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.
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(c) 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.
(d) NO RETENTION RIGHTS. Nothing in this Agreement shall confer upon
the Executive any right to continue in service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of
the Company or any subsidiary of the Company or of the Executive, which
rights are hereby expressly reserved by each, to terminate his or her
service at any time and for any reason, with or without Cause.
(e) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Minnesota.
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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[executive]
INFORMATION ADVANTAGE
SOFTWARE, INC.
By:
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Its:
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