BUSINESS OBJECTS S.A. CHANGE OF CONTROL SEVERANCE AGREEMENT
Exhibit 10.80
This Change of Control Severance Agreement (the “Agreement”) is made and entered into by and
between Xxxxx X. Xxxxxxx (the “Employee”) and Business Objects S.A. (the “Company”), effective as
of November 9, 2006 (the “Effective Date”).
RECITALS
1. It is expected that the Company from time to time will consider the possibility of an
acquisition by another company or other change of control. The Board of Directors of the Company
(the “Board”) recognizes that such consideration can be a distraction to the Employee and can cause
the Employee to consider alternative employment opportunities. The Board has determined that it is
in the best interests of the Company and its stockholders to assure that the Company will have the
continued dedication and objectivity of the Employee, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined herein) of the Company.
2. The Board believes that it is in the best interests of the Company and its stockholders to
provide the Employee with an incentive to continue his or her employment and to motivate the
Employee to maximize the value of the Company upon a Change of Control for the benefit of its
stockholders.
3. The Board believes that it is imperative to provide the Employee with certain severance
benefits upon the Employee’s termination of employment following a Change of Control. These
benefits will provide the Employee with enhanced financial security and incentive and encouragement
to remain with the Company notwithstanding the possibility of a Change of Control.
4. Certain capitalized terms used in the Agreement are defined in Section 6 below.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto
agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the date that all of the
obligations of the parties hereto with respect to this Agreement have been satisfied.
2. At-Will Employment. The Company and the Employee acknowledge that the Employee’s
employment is and shall continue to be at-will, as defined under applicable law, except as may
otherwise be specifically provided under the terms of any written formal employment agreement or
offer letter between the Company and the Employee (an “Employment Agreement”).
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If the Employee’s employment terminates for any reason, including (without limitation) any
termination prior to a Change of Control, the Employee shall not be entitled to any payments,
benefits, damages, awards or compensation other than as provided by this Agreement or under his or
her Employment Agreement, or as may otherwise be available in accordance with the Company’s
established employee plans.
3. Severance Benefits.
(a) Involuntary Termination Other than for Cause or Voluntary Termination for Good Reason
Following a Change of Control. If within twelve (12) months following a Change of Control (i)
the Employee terminates his or her employment with the Company (or any parent or subsidiary of the
Company) for “Good Reason” (as defined herein), or (ii) the Company (or any parent or subsidiary of
the Company) terminates the Employee’s employment for other than “Cause” (as defined herein), and
the Employee, signs and does not revoke a standard release of claims with the Company in a form
acceptable to the Company, then the Employee shall receive the following severance benefits from
the Company:
(i) Severance Payment. The Employee shall be entitled to receive a lump-sum severance
payment (less applicable withholding taxes) equal to 150% of the Employee’s annual base salary (as
in effect immediately prior to (A) the Change of Control, or (B) the Employee’s termination,
whichever is greater) plus 150% of the Employee’s target bonus for the fiscal year in which the
Change of Control or the Employee’s termination occurs, whichever is greater.
(ii) Options; Restricted Stock, Other Equity Compensation. All of the Employee’s then
outstanding options to purchase shares of the Company’s Common Stock (the “Options”) shall
immediately vest and become exercisable. The Options shall remain exercisable following the
termination for the period prescribed in the respective option agreements. Additionally, all of the
shares of the Company’s Common Stock then held by the Employee subject to a Company repurchase or
forfeiture right (the “Restricted Stock”) shall immediately vest and the Company’s right of
repurchase or receipt upon forfeiture with respect to such shares of Restricted Stock shall
immediately lapse. All other Company equity compensation held by the Employee shall also
immediately vest and the Company’s right to repurchase or receive upon forfeiture shall also
immediately lapse.
(iii) Continued Employee Benefits. Company-paid health, dental, vision, and life
insurance coverage at the same level of coverage as was provided to the Employee immediately prior
to the Change of Control and at the same ratio of Company premium payment to Employee premium
payment as was in effect immediately prior to the Change of Control (the “Company-Paid Coverage”)
will continue as set out in this subparagraph. If such coverage included the Employee’s dependents
immediately prior to the Change of Control, such dependents shall also be covered at Company
expense. Company-Paid Coverage shall continue until the earlier of (i) eighteen (18) months from
the date of termination, or (ii) the date upon which the Employee and his dependents become covered
under another employer’s group health, dental, vision and life insurance plans that provide
Employee and his dependents with comparable benefits and levels of coverage. For purposes of Title
X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the date of the “qualifying
event” for Employee and his or her dependents shall be the date upon which the Company-Paid
Coverage terminates.
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(b) Timing of Severance Payments. The severance payment to which Employee is entitled
shall be paid by the Company to Employee in cash and in full, not later than ten (10) calendar days
after the date of the termination of Employee’s employment. If the Employee should die before all
amounts have been paid, such unpaid amounts shall be paid in a lump-sum payment (less any
withholding taxes) to the Employee’s designated beneficiary, if living, or otherwise to the
personal representative of the Employee’s estate.
(c) Voluntary Resignation; Termination for Cause. If the Employee’s employment with
the Company terminates within twelve (12) months following a Change of Control (i) voluntarily by
the Employee other than for Good Reason or (ii) for Cause by the Company, then the Employee shall
not be entitled to receive severance or other benefits except for those (if any) as may then be
established under the Company’s then existing severance and benefits plans and practices or
pursuant to other written agreements with the Company.
(d) Termination Apart from Change of Control. In the event the Employee’s employment
is terminated for any reason, either prior to a Change of Control or after the twelve (12) month
period following a Change of Control, then the Employee shall be entitled to receive severance and
any other benefits only as may then be established under the Company’s existing written severance
and benefits plans and practices or pursuant to other written agreements with the Company.
(e) Exclusive Remedy. In the event of a termination of Employee’s employment within
twelve (12) months following a Change of Control, the provisions of this Section 3 are intended to
be and are exclusive and in lieu of any other rights or remedies to which the Employee or the
Company may otherwise be entitled, whether at law, tort or contract, in equity, or under this
Agreement, and the Employee shall be entitled to no benefits, compensation or other payments or
rights upon termination of employment within twelve (12) months following a Change in Control other
than those benefits expressly set forth in this Section 3.
4. Non-Competition/Non-Solicitation.
(a) Non-Competition. Employee acknowledges that the nature of the Company’s business
is such that if Employee were to become employed by, or substantially involved in, the business of
a competitor of the Company during the eighteen (18) months following the termination of Employee’s
employment with the Company (or any parent or subsidiary of the Company), it would be very
difficult for Employee not to rely on or use the Company’s trade secrets and confidential
information. Thus, to avoid the inevitable disclosure of the Company’s trade secrets and
confidential information, Employee agrees and acknowledges that Employee’s right to receive or
retain the severance payments and benefits set forth in Section 3 (to the extent Employee is
otherwise entitled to such payments and benefits) shall be conditioned upon Employee, for a period
of eighteen (18) months after termination of the Employee’s employment with the Company (or any
parent or subsidiary of the Company), not directly or indirectly engaging in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder, corporate officer,
director or otherwise), nor having any ownership interest in or participating in the financing,
operation, management or control of, any person, firm, corporation or business in Competition (as
defined herein) with the Company. Notwithstanding the foregoing, Employee may, without violating
this Section 4, own, as a passive investment, shares of capital stock of a publicly-held
corporation that engages in Competition where the number of shares of such corporation’s capital
stock that are owned by Employee represent less than three percent of the total number of shares of
such
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corporation’s capital stock outstanding. For the purposes of this Section 4, “Competition”
means the development, designing, manufacturing, marketing, distributing or servicing of business
intelligence software products.
(b) Non-Solicitation. Employee acknowledges that the nature of the Company’s business
is such that if Employee were to solicit, induce, recruit or encourage an employee to leave his or
her employment with the Company (or any parent or subsidiary of the Company), or were to attempt to
or cause any prospective or current client or customer to purchase products from a third party
rather than the Company, this would have a significant adverse impact upon the Company. Thus, to
avoid any such solicitation of employees, clients or customers, until the date eighteen (18) months
after the termination of Employee’s employment with the Company (or any parent or subsidiary of the
Company), for any reason, Employee agrees and acknowledges that Employee’s right to receive or
retain the severance payments and benefits set forth in Section 3 (to the extent Employee is
otherwise entitled to such payments and benefits) shall be conditioned upon Employee not:
(i) directly or indirectly soliciting, inducing, recruiting or encouraging an employee to
leave his or her employment with the Company (or any parent or subsidiary of the Company), either
for the Employee or for any other entity or person with which or whom the Employee has a business
relationship; and
(ii) on his or her own behalf or on behalf of any other person, firm, or company, solicit,
call upon, or otherwise initiate communication with any client, customer, prospective client, or
prospective customer of the Company for the purpose of causing or attempting to cause any such
person to purchase products sold or services rendered by the Company from any person or entity
other than the Company.
(c) Understanding of Covenants. Employee represents that he or she (i) is familiar
with the foregoing covenants not to compete and not to solicit, and (ii) is fully aware of his
obligations hereunder, including, without limitation, the reasonableness of the length of time,
scope and geographic coverage of these covenants.
(d) Remedy for Breach.
(i) Upon any breach of this Section 4 by the Employee, all severance payments and benefits
pursuant to this Agreement shall immediately cease and, notwithstanding the terms of the Employee’s
stock option agreement(s), any stock options then held by Employee shall immediately terminate and
be of no further force and effect, and Employee shall be obligated to return any payments already
made under Section 3 hereof, including but not limited to, any gains from the sale of accelerated
equity awards thereunder and any group health insurance premiums paid by the Company.
(ii) The Employee agrees that a breach by the Employee of any of the covenants contained in
Section 4 would result in damages to the Company and that the Company could not adequately be
compensated for such damages by monetary award. Accordingly, the Employee agrees that in the event
of any such breach, in addition to all other remedies available to the Company at law or in equity,
the Company shall be entitled as a matter of right to apply to a court of competent jurisdiction,
in California, for such relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this agreement.
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5. Golden Parachute Excise Tax Best Results. In the event that the severance and
other benefits provided for in this agreement or otherwise payable to Employee (a) constitute
“parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”) and (b) would be subject to the excise tax imposed by Section 4999 of the
Code, then such benefits shall be either be
| (i) | delivered in full, or | ||
| (ii) | delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, |
whichever of the foregoing amounts, taking into account the applicable federal, state and local
income and employment taxes and the excise tax imposed by Section 4999, results in the receipt by
Employee, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or
some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Company
and the Employee otherwise agree in writing, the determination of Employee’s excise tax liability
and the amount required to be paid under this Section 5 shall be made in writing by the Company’s
independent auditors who are primarily used by the Company immediately prior to the Change of
Control (the “Accountants”). For purposes of making the calculations required by this Section 5,
the Accountants may make reasonable assumptions and approximations concerning applicable taxes and
may rely on reasonable, good faith interpretations concerning the application of Sections 280G and
4999 of the Code. The Company and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a determination under this
Section. The Company shall bear all costs the Accountants may reasonably incur in connection with
any calculations contemplated by this Section 5.
6. Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:
(a) Cause. “Cause” shall mean (i) an act of personal dishonesty taken by the Employee
in connection with his or her responsibilities as an employee and intended to result in substantial
personal enrichment of the Employee, (ii) Employee being convicted of, or plea of nolo
contendere to, a felony, (iii) a willful act by the Employee which constitutes gross misconduct
and which is injurious to the Company, (iv) following delivery to the Employee of a written demand
for performance from the Company which describes the basis for the Company’s reasonable belief that
the Employee has not substantially performed his duties, continued violations by the Employee of
the Employee’s obligations to the Company which are demonstrably willful and deliberate on the
Employee’s part which, if curable, continues for a period of not less than thirty (30) days
following delivery to Employee of the written demand of performance.
(b) Change of Control. “Change of Control” means the occurrence of any of the
following, in one or a series of related transactions:
(i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities; or
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(ii) Any action or event occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who
either (A) are directors of the Company as of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors
at the time of such election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating to the election of
directors to the Company); or
(iii) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) The consummation of the sale, lease or other disposition by the Company of all or
substantially all the Company’s assets.
(c) Good Reason. “Good Reason” means without the Employee’s express written consent
(i) a substantial reduction of the Employee’s duties, title, authority or responsibilities,
relative to the Employee’s duties, title, authority or responsibilities as in effect immediately
prior to such reduction, or the assignment to Employee of such reduced duties, title, authority or
responsibilities; specifically, if Employee is not made chief financial officer of the acquirer,
with all of the acquirer’s financial operations and personnel reporting to Employee, and with
Employee directly reporting to the Chief Executive Officer of the acquirer, then that shall
constitute Good Reason; provided, however, that Employee’s acceptance of a new position on or after a
Change of Control shall not in and of itself constitute express written consent that such position
does not constitute a substantial reduction in Employee’s
duties, title, authority or responsibilities; (ii) a substantial reduction of the facilities and perquisites (including
office space and location) available to the Employee immediately prior to such reduction; (iii) a
reduction by the Company in the base compensation of the Employee as in effect immediately prior to
such reduction; (iv) a material reduction by the Company in the kind or level of benefits to which
the Employee was entitled immediately prior to such reduction with the result that such Employee’s
overall benefits package is significantly reduced; (v) the relocation of the Employee to a facility
or a location more than thirty-five (35) miles from such Employee ‘s then present location.
Notwithstanding the foregoing, Good Reason shall not exist based on conduct described above unless
Employee provides the Company with written notice specifying the particulars of the conduct
constituting Good Reason, and the conduct described (if reasonably susceptible of cure) has not
been cured within thirty (30) days following receipt by the Company of such notice.
7. Successors.
(a) The Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or otherwise) and/or to all or
substantially all of the Company’s business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such obligations 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 an assumption
agreement described in this Section 7(a) or which becomes bound by the terms of this Agreement by
operation of law.
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(b) The Employee’s Successors. The terms of 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.
8. Notice.
(a) General. All notices and other communications required or permitted hereunder
shall be in writing, shall be effective when given, and shall in any event be deemed to be given
upon receipt or, if earlier, (a) five (5) days after deposit with the U.S. Postal Service or other
applicable postal service, if delivered by first class mail, postage prepaid, (b) upon delivery, if
delivered by hand, (c) one (1) business day after the business day of deposit with Federal Express
or similar overnight courier, freight prepaid or (d) one (1) business day after the business day of
facsimile transmission, if delivered by facsimile transmission with copy by first class mail,
postage prepaid, and shall be addressed (i) if to Employee, at his or her last known residential
address and (ii) if to the Company, at the address of its principal corporate offices (attention:
Secretary), or in any such case at such other address as a party may designate by ten (10) days’
advance written notice to the other party pursuant to the provisions above.
(b) Notice of Termination. Any termination by the Company (or any parent or
subsidiary of the Company), for Cause or by the Employee for Good Reason or as a result of a
voluntary resignation shall be communicated by a notice of termination to the other party hereto
given in accordance with Section 8(a) of this Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than thirty (30) days after the giving
of such notice). The failure by the Employee to include in the notice any fact or circumstance
which contributes to a showing of Good Reason shall not waive any right of the Employee hereunder
or preclude the Employee from asserting such fact or circumstance in enforcing his or her rights
hereunder.
9. Miscellaneous Provisions.
(a) Code Section 409A. The parties agree to amend this Agreement to the extent
necessary to avoid imposition of any additional tax or income recognition prior to actual payment
to Employee under Code section 409A and any temporary or final Treasury Regulations and IRS
guidance thereunder.
(b) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of
any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings
that the Employee may receive from any other source.
(c) 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 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.
(d) Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.
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(e) Entire Agreement. This Agreement constitutes the entire agreement of the parties
hereto and supersedes in their entirety all prior representations, understandings, undertakings or
agreements (whether oral or written and whether expressed or implied) of the parties with respect
to the subject matter hereof, including but not limited to the Business Objects S.A. Stock Option
Plans Change of Control Agreement dated effective as of January 2, 2003 between Business Objects
S.A. and Xxxxx Xxxxxxx and the Business Objects S.A. Change of Control Severance Agreement by and
between Business Objects S.A. and Xxxxx X. Xxxxxxx dated effective as
of September 11, 2006.
(f) Choice of Law. The validity, interpretation, construction and performance of all
aspects of this Agreement relating to whether a Change of Control has occurred shall be governed by
and construed in accordance with the applicable laws of the Republic of France, and all other
aspects of this Agreement shall otherwise be subject to the laws of the State of California,
without regard to conflicts of laws. The Superior Court of Santa Xxxxx County and/or the United
States District Court for the Northern District of California shall have exclusive jurisdiction and
venue over all controversies in connection with this Agreement.
(g) 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.
(h) Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.
(i) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.
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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 set
forth above.
| COMPANY | BUSINESS OBJECTS S.A. | |||||
| By: | /s/ Xxxx X. Xxxxxxx | |||||
| Xxxx X. Xxxxxxx | ||||||
| Title: | Chief Executive Officer | |||||
EMPLOYEE
|
By: | /s/ Xxxxx X. Xxxxxxx | ||||
| Xxxxx X. Xxxxxxx | ||||||
| Title: | Chief Financial Officer and SVP | |||||
| Finance and Administration | ||||||
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