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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (hereinafter referred to as "Agreement") made as of
the May 27, 1997 between Xxxx X. Xxxxxx of Danbury, Connecticut, (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" or "Company").
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
Senior Vice President, Product Development 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 Chief Executive Officer
("CEO") and other members of the Board of Directors.
2. TERM OF EMPLOYMENT: The Employee's employment shall begin as of the date
of execution of this Agreement, which shall be the Employee's date of hire (the
"Hire Date") for purposes of this Agreement. The initial term of the Employee's
employment shall begin on the date the Employee begins working at the Stamford
office (the "Start Date"), which shall be on July 1, 1997 and shall continue
until the third anniversary of the Start Date, provided, however, the Employee's
employment shall be automatically renewed from year to year thereafter for
successive one (1) year terms unless terminated by either party on written
notice sent not later than six (6) months prior to the expiration of the initial
three (3) year term or any renewal year, unless sooner terminated as provided
herein. Notwithstanding the foregoing, the Corporation may terminate this
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Agreement at any time without cause upon thirty (30) days written notice to
Employee in which event the Corporation shall pay severance to Employee pursuant
to Section 9(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 $6,250 on the fifteenth and the last day of each month, commencing with
the month of the Start Date. It is understood that the foregoing base salary is
the base salary in effect for the Corporation's fiscal year ending June 30, 1998
and that such base salary will be increased, on a pro rata basis on July 1,
1998. The Employee's base salary may be increased by the Board of Directors from
time to time in its sole and absolute discretion.
4. BONUS. You will be eligible for a bonus targeted at 40% of base salary
(20% of base salary will be guaranteed for fiscal year 1998), assuming
achievement of the Company's objectives and your personal objectives the latter
to be determined by the CEO, working closely with other members of the Board of
Directors. You will also be eligible for an additional bonus for overachievement
of objectives. The specifics of overachievement will be determined at the time
your objectives are set.
5. OPTIONS. Upon joining the Company ("the Hire Date"), the Employee will
receive an option right to purchase up to 25,000 shares of Hyperion Software
Corporation ("Parent") common stock priced at then current market value per
share (under the Parent's 1991 Stock Plan). These shares will vest and become
exercisable as follows: 12,500 shares on June 30, 1997 and 6,250 shares each on
June 30, 1998 and 1999, so long as the Employee remains continuously employed by
the Company.
6. SIGN ON BONUS AND RELOCATION PACKAGE. Within two (2) weeks of the Start
Date, the Employee will receive a sign-on advance of $75,000, one eighteenth
(1/18) of which will be forgiven with each full month of employment. However, if
the Employee's employment is terminated by the Corporation (other than pursuant
to Section 9(c), (d) or (e) hereof) the entire remaining amount will be
forgiven.
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If the Employee relocates to his primary residence within eighteen (18)
months from the Start Date to be closer to our Stamford offices, the Corporation
will reimburse the Employee for up to $20,000 of direct relocation costs
(excluding related income tax and other payroll tax withholdings, if any)
actually incurred by the Employee. This $20,000 allowance will be reduced by
relocation costs incurred by the Corporation on behalf of the Employee, if any.
7. FRINGE BENEFITS:
(a) During the term hereof, commencing on the Start Date, 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
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 in each
year equal to the lesser of (x) seventy-five (75%) percent of
all such expenses or(y) $500,
(iv) reimburse the Employee for the reasonable and customary
cost of an annual physical examination,
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(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 (provided such insurance is available at
reasonable cost), 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,
(vii) provide life insurance in an amount equal to three times
(3X) Employee's base salary provided such insurance is available
at reasonable cost,
(viii) provide the Employee with an automobile expense allowance
equal to $600 per month, and
(ix) provide the Employee four (4) weeks vacation each year,
subject to Company policy, the time of which shall be subject to
the prior approval of the CEO of the Corporation.
8. DUTIES AND EXTENT OF SERVICES: Upon the execution of this Agreement and
throughout its term, the Employee shall assume the position Senior Vice
President, Product Development 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
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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.
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
Executive Officer or the Chief Financial Officer of the Corporation.
9. TERMINATION: Unless renewed as provided herein, the Employee's
employment hereunder shall terminate June 30, 2000 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;
(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
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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, except
that if such dereliction or misconduct should occur more than one time,
then the Corporation may, at its option, terminate this Agreement
immediately without any additional notice or cure 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 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,
except that if such failure or refusal should occur more than one time,
then the Corporation may, at its option, terminate this Agreement
immediately without any additional notice or cure 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 or (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 (9)(a), (b), (c), (d), (e),
and/or (f) hereof, or (B) Employee terminates his employment for Good
Reason (as hereinafter defined), or (iii) for the first six (6) months
of employment only, if there is a
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material diminution in responsibilities and/or salary, then the
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
7(a), acknowledging that this must be a "reasonable amount" for
insurance items 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, for a
twelve month period only, payable in twelve (12) equal consecutive
monthly installments (without interest) beginning one (1) month after
such termination plus (iv) the guaranteed portion of bonus payments
referenced in Section 4. For purposes of this paragraph (g),
"Non-Extendible Benefit" shall mean a fringe benefit described in
Section 7(a) acknowledging that this must be a "reasonable amount" for
insurance items for which 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 9(g) shall
immediately be and be
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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 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
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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 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 9(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.
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(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 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 9(g),
COBRA benefits
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shall commence at the expiration of the twelve (12) months (or such
shorter period) as is provided in such Section.
10. 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 with 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 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.
11. 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.
12. 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
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benefit or purposes, or disclose to others, either during the term of
this employment hereunder or thereafter, any proprietary 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.
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(c) The Employee expressly agrees that the covenants set forth in
Sections 10, 11 and 12 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.
13. 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.
14. 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.
15. 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 9(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.
16. ENTIRE AGREEMENT: This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated herein and
supersedes all previous representations, negotiations, commitments, and writing
with respect hereto.
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17. AMENDMENT OR ALTERATION: No amendment or alteration of the terms of this
Agreement shall be valid unless made in writing and signed by all the parties
hereto.
18. CHOICE OF LAW: This Agreement shall be governed by the laws of the
State of Connecticut.
19. 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.
20. 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.
21. 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.
22. 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.
23. GENDER: Pronouns in any gender shall be construed as masculine,
feminine, or neuter as the context requires in this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
CORPORATION:
Hyperion Software Operations Inc.
/s/ Xxxxx X. Xxxxxxx
----------------------------------------
By: Xxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
EMPLOYEE:
/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
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