<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________.
-------------------------
COMMISSION FILE NUMBER 0-26934
HYPERION SOLUTIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0277772
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1344 CROSSMAN AVENUE, SUNNYVALE, CALIFORNIA 94089
(Address of principal executive offices, including zip code)
(408) 744-9500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
As of February 9, 2000, there were 32,019,320 shares of the Registrant's common
stock, $.001 par value, outstanding.
================================================================================
<PAGE> 2
Hyperion Solutions Corporation
Form 10-Q
CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheet--December 31, 1999 and
June 30, 1999............................................................2
Condensed Consolidated Statement of Operations-- Three Months
Ended December 31, 1999 and 1998; Six Months Ended December 31,
1999 and 1998............................................................3
Condensed Consolidated Statement of Cash Flows--
Six Months Ended December 31, 1999 and 1998.............................4
Notes to Condensed Consolidated Financial Statements--December 31,
1999....................................................................5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................................9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................17
Item 6. Exhibits and Reports on Form 8-K.....................................18
SIGNATURES...................................................................19
Copyright 2000 Hyperion Solutions Corporation. All rights reserved. Hyperion,
Essbase, Pillar, Hyperion Enterprise, Hyperion Reporting, LedgerLink, Business
Intelligence, and Financial Intelligence are registered trademarks and Hyperion
Solutions, the Hyperion "H" logo, See The Future First, Essbase-Ready, Hyperion
Essbase, Hyperion Allocations, Hyperion DataExtend, Hyperion Distributed
Retrieve, Hyperion Distributed Schedules, Hyperion Drill Manager, Hyperion
Objects, Hyperion Quicksends, Hyperion Schedules, Hyperion Integration Server,
HyperionReady, and Hyperion Web Gateway are trademarks of Hyperion Solutions
Corporation. Wired for OLAP and the Appsource Corporation logo are trademarks of
Appsource Corporation, a wholly owned subsidiary of Hyperion Solutions
Corporation. All other trademarks and company names mentioned are the property
of their respective owners.
For further information, refer to the Hyperion Solutions Corporation annual
report on Form 10-K for the year ended June 30, 1999.
<PAGE> 3
Hyperion Solutions Corporation
Condensed Consolidated Balance Sheet
(in thousands, except per share data)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
---------------------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $245,523 $233,515
Short-term investments 38,097 38,341
Accounts receivable--net of allowances of $12,250 and $11,800 113,747 110,744
Prepaid expenses and other current assets 6,429 6,290
Deferred income taxes 10,037 10,386
-------------------------
TOTAL CURRENT ASSETS 413,833 399,276
Property and equipment--at cost, less accumulated depreciation
and amortization of $77,356 and $65,444 68,735 75,456
Acquired technologies, goodwill and other intangible assets--at
cost, less accumulated amortization of $20,657 and $17,186 24,565 26,522
Other assets 13,382 11,640
-------------------------
Total assets $520,515 $512,894
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 49,151 $ 55,012
Accrued employee compensation and benefits 24,869 29,920
Income taxes payable 1,526 2,345
Deferred revenue 82,785 81,089
-------------------------
TOTAL CURRENT LIABILITIES 158,331 168,366
Long-term debt 100,000 103,752
Stockholders' equity:
Preferred stock--$.001 par value; 5,000 shares authorized;
none issued
Common stock--$.001 par value; 300,000 shares authorized;
31,462 and 30,842 shares issued and outstanding 31 31
Additional paid-in capital 162,347 153,545
Retained earnings 104,015 90,917
Currency translation adjustments (4,209) (3,717)
-------------------------
TOTAL STOCKHOLDERS' EQUITY 262,184 240,776
-------------------------
Total liabilities and stockholders' equity $520,515 $512,894
=========================
</TABLE>
Note: the balance sheet at June 30, 1999 has been derived from the audited
financial statements at that date.
See accompanying notes.
-2-
<PAGE> 4
Hyperion Solutions Corporation
Condensed Consolidated Statement of Operations (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------------------- --------------------------
<S> <C> <C> <C> <C>
REVENUES
Software licenses $ 55,740 $ 51,886 $102,141 $105,590
Maintenance and services 60,053 55,072 120,902 106,250
-------------------------- --------------------------
Total revenues 115,793 106,958 223,043 211,840
-------------------------- --------------------------
COSTS AND EXPENSES
Cost of revenues:
Software licenses 1,703 1,753 3,001 4,537
Maintenance and services 32,561 28,681 62,124 56,242
Sales and marketing 45,483 40,169 86,917 78,368
Research and development 16,670 14,889 32,962 30,266
General and administrative 10,334 9,342 20,760 18,086
Merger costs (credits) (305) (305) 21,800
-------------------------- --------------------------
106,446 94,834 205,459 209,299
-------------------------- --------------------------
OPERATING INCOME 9,347 12,124 17,584 2,541
Interest income 3,186 2,906 5,981 5,888
Interest expense (1,260) (1,282) (2,667) (2,614)
-------------------------- --------------------------
INCOME BEFORE INCOME TAXES 11,273 13,748 20,898 5,815
Provision for income taxes 4,200 5,100 7,800 7,100
-------------------------- --------------------------
NET INCOME (LOSS) $ 7,073 $ 8,648 $ 13,098 $ (1,285)
========================== ==========================
EARNINGS (LOSS) PER SHARE
Basic $ .23 $ .29 $ .42 $ (.04)
Diluted $ .22 $ .28 $ .41 $ (.04)
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 31,086 30,073 30,979 29,900
Diluted 32,477 30,922 32,016 29,900
</TABLE>
See accompanying notes.
-3-
<PAGE> 5
Hyperion Solutions Corporation
Condensed Consolidated Statement of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1999 1998
---------------------------
<S> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES $ 13,557 $ 3,873
INVESTING ACTIVITIES
Purchases of property and equipment (5,726) (15,408)
Sale of short-term investments, net 244 2,439
Intangible and other assets (2,663) (1,038)
---------------------------
Cash used by investing activities (8,145) (14,007)
FINANCING ACTIVITIES
Principal payments on notes payable (297) (583)
Exercise of stock options by employees 7,385 10,003
---------------------------
Cash provided by financing activities 7,088 9,420
Effect of exchange rate changes (492) 991
---------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 12,008 277
Cash and cash equivalents at beginning of period 233,515 221,868
---------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $245,523 $222,145
===========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 7,823 $ 17,267
Interest 2,361 2,395
</TABLE>
See accompanying notes.
-4-
<PAGE> 6
Hyperion Solutions Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)
December 31, 1999
A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring accruals, considered necessary for a fair presentation
have been included in the accompanying unaudited financial statements. Operating
results for the three- and six-month periods ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the full year
ending June 30, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto for the year ended June 30, 1999
included in the Hyperion Solutions Corporation (the "Company" or "Hyperion")
report on Form 10-K filed on September 28, 1999.
B. EARNINGS PER SHARE
Shares used in computing basic and diluted earnings (loss) per share are based
on the weighted average shares outstanding in each period. Basic earnings (loss)
per share excludes the effects of stock options, warrants and convertible
securities. Diluted earnings (loss) per share includes the dilutive effect of
the assumed exercise of stock option, warrant and/or convertible security rights
using the treasury stock method.
The following table sets forth the computation of basic and diluted earnings
(loss) per share ("EPS") (in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
Numerator--net income (loss) $ 7,073 $ 8,648 $13,098 $(1,285)
======================= =======================
Denominator for basic EPS--weighted-average shares 31,086 30,073 30,979 29,900
Effect of dilutive securities:
Stock option rights 1,391 849 1,037
----------------------- -----------------------
Denominator for diluted EPS--adjusted weighted-
average shares and assumed conversions 32,477 30,922 32,016 29,900
======================= =======================
Basic earnings (loss) per share $ .23 $ .29 $ .42 $ (.04)
Diluted earnings (loss) per share $ .22 $ .28 $ .41 $ (.04)
</TABLE>
-5-
<PAGE> 7
Hyperion Solutions Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
December 31, 1999
B. EARNINGS PER SHARE (CONTINUED)
Because their effect would be antidilutive, certain stock option rights for 1.4
million and 2.1 million common shares were excluded from the diluted EPS
calculation, respectively, for the three- and six-month periods ended December
31, 1999. For the same reason, shares of common stock issuable upon conversion
of the convertible subordinated notes due 2005 have been excluded from the
diluted EPS calculation.
C. COMPREHENSIVE INCOME
Comprehensive income is a measure of all changes in equity of an enterprise that
results from recognized transactions and other economic events of a period other
than transactions with owners in their capacity as owners. For the periods
indicated, comprehensive income (loss) of the Company was as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------------- -------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 7,073 $8,648 $13,098 $(1,285)
Currency translation adjustments, net of tax (1,016) (220) (310) 595
------------------- -------------------
Comprehensive income (loss) $ 6,057 $8,428 $12,788 $ (690)
=================== ===================
</TABLE>
D. CONTINGENCIES
From time to time, in the normal course of business, various claims are made
against the Company. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position of the Company.
E. SEGMENT AND GEOGRAPHICAL INFORMATION
The Company has identified two reportable operating segments based on the
criteria of Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information": software licensing,
and maintenance and services. Software license fees are derived from the sale of
software product licenses. Maintenance and services revenues come from providing
product installation, support and training services.
The Company's Chief Executive Officer evaluates performance based on measures of
segment revenues, gross profit and company-wide operating results. Employee
headcount and operating costs and expenses are managed by functional areas,
rather than by revenue segments. Moreover, the Company does not account for or
report to the CEO its assets or capital expenditures by segments. The
significant accounting policies of the reportable segments are the same as those
summarized in the Company's annual report on Form 10-K filed on September 28,
1999.
-6-
<PAGE> 8
Hyperion Solutions Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
December 31, 1999
E. SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)
The accompanying statement of operations discloses the financial information of
the Company's reportable segments in accordance with Statement 131 for the
three- and six-month periods ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Other
U.S. U.K. International
Operations Operations Operations Eliminations Consolidated
- -------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S> <C> <C> <C> <C> <C>
THREE MONTHS ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------
1999
Revenues:
Customers $ 98,228 $ 9,019 $ 8,546 $115,793
Intercompany 3,861 7,061 $(10,922)
- -------------------------------------------------------------------------------------------------------------------------
Total 102,089 9,019 15,607 (10,922) 115,793
=========================================================================================================================
Operating income (loss) $ 17,387 $ 1,594 $ (9,634) $ 9,347
=========================================================================================================================
1998
Revenues:
Customers $ 90,498 $ 7,770 $ 8,690 $106,958
Intercompany 3,654 7,412 $(11,066)
- -------------------------------------------------------------------------------------------------------------------------
Total 94,152 7,770 16,102 (11,066) 106,958
=========================================================================================================================
Operating income (loss) $ 18,428 $ 398 $ (6,702) $ 12,124
=========================================================================================================================
SIX MONTHS ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------------
1999
Revenues:
Customers $191,392 $15,497 $ 16,154 $223,043
Intercompany 7,095 13,130 $(20,225)
- -------------------------------------------------------------------------------------------------------------------------
Total 198,487 15,497 29,284 (20,225) 223,043
=========================================================================================================================
Operating income (loss) 37,254 (1,698) (17,972) 17,584
=========================================================================================================================
Identifiable assets $437,132 $15,239 $ 68,144 $520,515
=========================================================================================================================
1998
Revenues:
Customers $177,696 $18,081 $ 16,063 $211,840
Intercompany 6,617 75 11,737 $(18,429)
- -------------------------------------------------------------------------------------------------------------------------
Total 184,313 18,156 27,800 (18,429) 211,840
=========================================================================================================================
Operating income (loss) 12,077 4,332 (13,868) 2,541
=========================================================================================================================
Identifiable assets $404,862 $21,434 $ 58,328 $484,624
=========================================================================================================================
</TABLE>
-7-
<PAGE> 9
Hyperion Solutions Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited) (continued)
December 31, 1999
E. SEGMENT AND GEOGRAPHICAL INFORMATION (CONTINUED)
"Other International Operations" relate to subsidiaries in Austria,
Belgium, Canada, Finland, France, Germany, Italy, Japan, the Netherlands,
Singapore, Spain, Sweden and Switzerland. Operating income from
operations outside the United States approximates income before income
taxes of such operations. Intercompany revenues between geographic areas
are accounted for at prices representative of unaffiliated party
transactions of a similar nature.
Revenues from markets outside the United States were as follows (dollars
in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
---------------------- ---------------------
<S> <C> <C> <C> <C>
U.K. operations $ 9,019 $ 7,770 $15,497 $18,081
Other international operations 8,546 8,690 16,154 16,063
Export 23,894 19,633 46,755 39,753
-----------------------------------------------------------------------------------------
$41,459 $36,093 $78,406 $73,897
=========================================================================================
Percentage of total revenues 35.8% 33.7% 35.2% 34.9%
=========================================================================================
</TABLE>
The majority of "Export" revenues, some of which are generated
through independent distributors and agents, results from
product licenses and services sold to customers throughout
Europe.
-8-
<PAGE> 10
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW
- --------------------------------------------------------------------------------
Hyperion develops, markets and supports enterprise analytic application software
that helps companies better understand, optimize and operate their businesses.
Hyperion's products complement software that companies use to capture and
organize data. Hyperion's products integrate with, extend and enhance
transaction processing applications, enterprise resource planning (ERP) and
customer relationship management packaged applications, and data warehouses. The
Company's offerings are based on Hyperion's enterprise-class analytic platform
and include packaged analytic applications, OLAP (on-line analytical processing)
server technology, data and application integration technologies, and a family
of robust tools for client-server and web-enabled reporting, analysis,
presentation and application development. Hyperion and its partners deliver
client/server and web-based products for a broad range of analytic applications
including budgeting and planning, financial consolidation and reporting,
activity-based management, performance management, campaign management analysis,
promotional analysis, sales forecasting, demand planning, e-business analysis
and industry-specific solutions. The Company's solutions are used by large
organizations worldwide.
Hyperion derives revenues from licensing its software products and providing
related product installation, support and training services. Customers are
billed an initial fee for the software upon delivery. A maintenance fee
entitling customers to routine support and product updates is billed annually.
With operations in twenty-six countries, Hyperion licenses its products
throughout the world primarily through a direct sales force. Products also are
licensed through independent distributors and sales agents, including other
technology and application software companies, and major accounting firms
("channel partners"). The Company includes in revenues its net share of revenues
generated by distributors. In the event that an agent has facilitated the sale
and Hyperion is the licensor, the license revenue is reported gross and a
commission charge is reflected.
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
REVENUES
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
December 31, 1999 CHANGE 1998 1999 CHANGE 1998
- -------------------------------- ---------------------------------- -------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Software licenses $55,740 7.4% $51,886 $102,141 (3.3)% $105,590
Percentage of total revenues 48.1% 48.5% 45.8% 49.8%
- -------------------------------- ---------------------------------- -------------------------------------
Maintenance and services $60,053 9.0% $55,072 $120,902 13.8% $106,250
Percentage of total revenues 51.9% 51.5% 54.2% 50.2%
- -------------------------------- ---------------------------------- -------------------------------------
</TABLE>
-9-
<PAGE> 11
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
Software license revenues for the three-month period ended December 31,1999
rose primarily as a result of an increase in the number of licenses sold (unit
volume) versus, for example, price increases. The growth in software sales was
led by demand for packaged analytic applications and tools. For the six-month
period, software license revenues declined primarily as a result of a decrease
in the September 1999 quarter in the number of licenses sold (unit volume).
Particularly within North America, the Company was hampered by sales-marketing
execution issues that stemmed from the Company's August 1998 business
combination. The decline in sales productivity, caused by the necessary decision
to combine and cross train the separate sales forces and other factors, first
occurred in the December 1998 quarter.
The increase in maintenance and services revenue is mainly attributable to the
year-to-year growth of the Company's installed customer base.
Revenues, including export sales, generated from markets outside the United
States for the first half of fiscal 2000 and 1999 were $78.4 million and $73.9
million, or 35.2% and 34.9% of total revenues, respectively. The increase was
due primarily to revenue growth in Canada, Italy and Scandinavia.
Revenues derived from channel partners for the three months ended December 31,
1999 and 1998 were 14.1% and 13.1% of total revenues, respectively. For the six
months ended December 31, 1999 and 1998, partner revenues were 14.5% and 13% of
total revenues.
COST OF REVENUES
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
December 31, 1999 CHANGE 1998 1999 CHANGE 1998
- -------------------------------- ---------------------------------- -------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Software licenses $ 1,703 (2.9)% $ 1,753 $ 3,001 (33.9)% $ 4,537
Gross profit percentage 96.9% 96.6% 97.1% 95.7%
- -------------------------------- ---------------------------------- -------------------------------------
Maintenance and services $32,561 13.5% $28,681 $62,124 10.5% $56,242
Gross profit percentage 45.8% 47.9% 48.6% 47.1%
- -------------------------------- ---------------------------------- -------------------------------------
</TABLE>
Cost of software license revenues consists primarily of the cost of product
packaging and documentation materials, amortization of capitalized software
costs, amortization of certain intangible assets related to business
acquisitions, and royalty expenses. The amortization of capitalized software
costs begins upon the general release of the software to customers. The decrease
in the cost of software license revenues for the six-month period principally
reflects a decrease in amortization of capitalized software costs.
The increase in the cost of maintenance and service revenues was due primarily
to additional staffing expense for both installation and ongoing support
services.
-10-
<PAGE> 12
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
OPERATING EXPENSES
<TABLE>
<CAPTION>
Second Quarter Ended Six Months Ended
December 31, 1999 CHANGE 1998 1999 CHANGE 1998
- -------------------------------- ---------------------------------- -------------------------------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Sales and marketing $45,483 13.2% $40,169 $86,917 10.9% $78,368
Percentage of total revenues 39.3% 37.6% 39.0% 37.0%
- -------------------------------- ---------------------------------- -------------------------------------
Research and development $16,670 12.0% $14,889 $32,962 8.9% $30,266
Percentage of total revenues 14.4% 13.9% 14.8% 14.3%
- -------------------------------- ---------------------------------- -------------------------------------
General and administrative $10,334 10.6% $ 9,342 $20,760 14.8% $18,086
Percentage of total revenues 8.9% 8.7% 9.3% 8.5%
- -------------------------------- ---------------------------------- -------------------------------------
</TABLE>
The increase in sales and marketing expenses is primarily due to a net increase
in sales-marketing personnel and, to a lesser extent, greater overall marketing
initiatives.
The increase in research and development expenses reflects additional personnel
costs associated with expanded product research and development activities. In
each of the six-month periods ended December 31, 1999 and 1998, the Company
capitalized $1 million of software development costs in accordance with
Statement of Financial Accounting Standards No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed." The amounts
capitalized relate to the Company's development of enterprise-wide, packaged
analytic application solutions for client/server environments and represented
2.8% and 3.1% of total research and development expenditures. Capitalized
software costs are amortized over the estimated economic life of the product,
but generally not more than three years.
The increase in general and administrative expenses resulted, for the most part,
from an increase in personnel costs incurred to manage and support the growth of
the Company's overall operations, offset to a lesser extent by a change in
accounting estimates of $1.7 million, primarily related to product warranties
for older product lines.
The merger of Arbor Software Corporation (former name of the Company) and
Hyperion Software Corporation was completed on August 24, 1998. In the quarter
ended September 30, 1998, the Company charged $21.8 million, $18.7 million after
taxes, to operations for nonrecurring costs incurred in connection with the
business combination.
PROVISION FOR INCOME TAXES
Excluding the impact of merger costs in the prior year, the Company's effective
income tax rate remained substantially unchanged at approximately 37%. The
Company's expected effective rate for the remainder of the fiscal year is 37%.
-11-
<PAGE> 13
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
NET INCOME (LOSS)
As a result of the above factors, net income for the three-month period ended
December 31, 1999 decreased to $7.1 million, or by 18.2%, from $8.6 million and
net income for the six-month period ended December 31, 1999 increased to $13.1
million, or by 1,119.3%, from a net loss of $1.3 million for the corresponding
period of 1998.
To date, the overall impact of inflation on the Company has not been material.
In December 1999, the staff of the Securities and Exchange Commission issued
its Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." SAB No.
101 provides guidance on the measurement and timing of revenue recognition in
financial statements of public companies. Changes in accounting policies to
apply the guidance of SAB No. 101 must be adopted by recording the cumulative
effect of the change in the fiscal quarter ending September 30, 2000.
Management believes that adoption of SAB No. 101 will not have a material
impact on the financial statements.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities." Statement 133
requires all derivative instruments (such as most foreign currency and interest
rate swaps, options, forwards, futures, collars, and warrants) to be recorded on
the balance sheet at fair value and establishes "special accounting" for the
following three different types of hedges: hedges of changes in the fair value
of assets, liabilities or firm commitments (fair value hedges), hedges of
variable cash flows of forecasted transactions (cash flow hedges), and hedges of
foreign currency exposures of net investments in foreign operations. Though the
accounting treatment and criteria for each of the three types of hedges are
unique, they all result in recognizing offsetting changes in value or cash flows
of both the hedge and the hedged item in earnings in the same period. Changes in
the fair value of derivatives that do not meet the criteria of one of these
three categories of hedges are to be included in earnings in the period of the
change. Statement 133, as amended, is effective for the Company beginning in
fiscal 2001, and the Company has not yet determined the impact, if any, the
adoption of the statement will have on its financial statements.
RISK FACTORS, INCLUDING YEAR 2000 COMPLIANCE
Except for the historical information contained in this report on Form 10-Q, the
matters discussed herein are forward-looking statements that involve risks and
uncertainties. Actual events and the Company's future results may vary
significantly based on a number of factors, including, but not limited to, those
discussed in the following paragraphs of this section; whether the process of
effecting the Arbor Software/Hyperion Software business combination can be
effectively managed to realize the synergies anticipated to result therefrom;
the impact of competitive products and pricing; whether the process of effecting
the Company's recent acquisitions can be effectively managed to realize the
synergies anticipated to result therefrom; and whether the Company can
successfully develop and bring to market new product offerings in high growth
sectors of the business analytics market. Any forward-looking statements should
be considered in light of these factors as well as other risks as detailed
elsewhere in this quarterly report, and in the Company's most recent annual
report on Form 10-K. Further, readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof.
-12-
<PAGE> 14
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
YEAR 2000 READINESS DISCLOSURE
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. To the Company's knowledge,
it has not experienced any significant problems as a result of Year 2000 issues.
State of Readiness of the Company's Year 2000 Issues
The Company continues to assess both the readiness of its internal business
information systems for handling the Year 2000 and the compliance of products
sold by the Company. The Company has had to modify and/or replace portions of
its internal business information systems so that the systems will function
properly with respect to dates in the Year 2000 and beyond.
The Company believes that all current versions of its products are Year 2000
compliant. However, prior versions of certain of these products currently
installed at certain customer sites will require upgrading or other
modifications to become Year 2000 compliant. The Company believes that it is not
legally responsible for costs incurred by these customers to achieve Year 2000
compliance. However, there can be no assurance that these customers will not
assert claims against the Company with respect to Year 2000 issues and, in the
event such claims are asserted and adjudicated in favor of these customers, the
Company's liability could be material. The Company has taken steps to identify
affected customers, raise customer awareness related to noncompliance of certain
of the Company's older products and assist its customers in assessing their
risks. The Company may incur increasing costs regarding customer satisfaction
related to these actions over the next few years. Since the Company's customer
satisfaction programs are currently ongoing, the scope of any resulting Year
2000 issues is not fully known and potential liability resulting from these
issues is unclear, and the potential impact on the Company's business, operating
results and financial condition with respect to these matters is not known at
this time.
The Company's Hyperion accounting software, a product set formerly offered by
the Company, was not originally Year 2000 compliant. The Company is aware of a
limited number of customers who continue to use this product set. The Company
was obligated under its agreements with certain of these customers to provide
upgrades to this product set which are Year 2000 compliant. Beginning in the
quarter ended December 1998, the Company made available and to date has
delivered to these customers a Year 2000 compliant release of its accounting
software. The Company has also made available to these customers a migration
path to a product offered pursuant to the Company's alliance with Baan/Coda,
which the Company believes is Year 2000 compliant. However, there can be no
assurance that such product is Year 2000 compliant. The Company does not expect
the cost associated with this compliance effort, including planning,
implementation and testing, to be material to its financial condition, although
there can be no assurance that the Company will not be required to incur
significant unanticipated costs in relation to its compliance obligations. Such
unanticipated costs, if incurred, could have a material adverse effect on the
Company's business, operating results and financial condition.
-13-
<PAGE> 15
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
The Company has had discussions with and received compliance information from
its significant vendors, service providers and large customers to evaluate Year
2000 issues, if any, relating to the interaction of their systems with the
Company's internal systems. The Company has gathered written compliance
information from a large majority of these third parties and has received
information on all relevant outside system dependencies. At this time, after
having carefully reviewed the compliance data relating to these third parties
and their interaction with the Company, and based on discussions with some of
the other third parties, the Company has achieved a sufficient level of Year
2000 compliance regarding these dependencies without incurring significant
costs. However, a failure by these third parties to address adequately their
Year 2000 readiness could have a material adverse affect on the Company's
business, operating results or financial condition.
Costs Associated with the Company's Year 2000 Issues
To date, the Company has not incurred any material expenditures in connection
with identifying or evaluating Year 2000 compliance issues. Most of its expenses
have related to the opportunity cost of time spent by employees of the Company
evaluating the Company's internal business information systems, the products
sold by the Company and the interaction of the Company's internal business
information systems with the internal systems of third parties. Although the
Company is not aware of any material operational issues or costs associated with
preparing its internal business information systems and its products for the
Year 2000, there can be no assurances that the Company will not experience
serious unanticipated negative consequences and/or material costs caused by
undetected errors or defects in the technology used in the Company's internal
business information systems or products the Company sells. Such unanticipated
negative consequences and/or material costs, if incurred, could have a material
adverse effect on the Company's business, operating results or financial
condition.
Contingency Plan Regarding the Company's Year 2000 Issues
As the Company is not aware of any material Year 2000 compliance issues, it has
not developed a Year 2000-specific contingency plan. If material Year 2000
compliance issues are discovered, the Company will evaluate the need for one or
more contingency plans relating to such issues.
In addition, the Company is aware of the potential for claims against it and
other companies for damages arising from products and services that were not
Year 2000 ready. The Company continues to believe that any such claims against
it would be without merit.
While the Company believes that its planning efforts are adequate to address its
Year 2000 issues on a timely basis, there can be no assurance that there will
not be a delay in, or increased costs associated with, implementation of changes
to address any such issues, which could have a material adverse effect on the
Company's business, operating results or financial condition.
-14-
<PAGE> 16
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
MARKET RISKS
At December 31, 1999, the Company's investment portfolio consisted of
investment-grade debt securities, excluding those classified as cash
equivalents, of $38.1 million. The portfolio is invested predominantly in
short-term securities to minimize interest rate risk and for liquidity purposes
in the event of immediate cash needs. Accordingly, if market interest rates were
to increase immediately and uniformly by 10% from levels as of December 31,
1999, the decline in the fair value of the portfolio would not be material.
The Company's long-term debt bears interest, for the most part, at a fixed rate
and, therefore, relative to its long-term debt, an immediate 10% change in
market interest rates would not materially impact the Company's financial
statements.
Approximately one-third of the Company's sales, cost of sales and marketing is
transacted in local currencies. As a result, the Company's operations from
markets outside the United States are subject to foreign exchange rate
fluctuations.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company had a software licensing backlog of approximately $15 million at
June 30, 1999, which sales were completed in the September 1999 quarter upon
shipment of product to customers. The amount decreased sequentially in the
September 1999 and December 1999 quarters, and at December 31, 1999, the Company
had a software licensing backlog of approximately $6 million. The Company's
backlog fluctuates from period to period; however, the Company anticipates that
the level of backlog will continue to decrease in the March 2000 quarter.
Nonetheless, quarterly revenues and operating results are highly dependent on
the volume and timing of the signing of licensing agreements and product
deliveries during the quarter, which are difficult to forecast. The Company's
future operating results may fluctuate due to these and other factors, such as
customer buying patterns, the deferral and/or realization of deferred software
license revenues according to contract terms, the timing of new product
introductions and product upgrade releases, the Company's ability or inability
to retain qualified personnel, its overall hiring plans, the scheduling of sales
and marketing programs, new product development by the Company, its channel
partners or its competitors and currency exchange rate movements. A significant
portion of the Company's quarterly software licensing agreements is concluded in
the last month of the fiscal quarter, generally with a concentration of such
revenues earned in the final ten business days of that month. The Company
generally has realized lower revenues in its first (September) and third (March)
fiscal quarters than in the immediately preceding quarters. Total revenues and
net income were $115.8 million and $7.1 million, respectively, for the second
quarter of fiscal 2000, and $107.3 million and $6 million, respectively, for the
first quarter of fiscal 2000. The Company believes that these revenue
fluctuations are caused by customer buying patterns, including traditionally
slow purchase activity in the summer months and low purchase activity in the
corporate financial applications market during the March quarter, as many
potential customers are busy with their year-end closing and financial
reporting. In any case, due to the relatively fixed nature of certain costs,
including personnel and facilities expenses, a decline or shortfall in quarterly
and/or annual revenues typically results in lower profitability or may result in
losses.
-15-
<PAGE> 17
Hyperion Solutions Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------------------------------------------------------
To date, the Company has financed its business through positive cash flow from
operations and, to a lesser extent, through the issuance of its capital stock
and convertible subordinated notes. For fiscal years 1997, 1998 and 1999, and
for the six months ended December 31, 1999, the Company generated positive cash
flow from operations of $49.7 million, $87.6 million, $43.2 million and $13.6
million, respectively.
Cash used by investing activities amounted to $8.1 million for the first half of
fiscal 2000, including $5.7 million primarily for purchases of computer
equipment and software, and $2.7 million for intangible and other assets,
comprised primarily of $1 million for product development costs and $1 million
for a loan to an executive officer.
Financing activities in the first half of fiscal 2000, including stock options
exercised by employees and payments of indebtedness, generated cash of $7.1
million. In connection with the stock options exercised by certain of its
employees (for a total of 620 thousand common shares), the Company recognized
(as a credit to additional paid-in capital) an income tax benefit of $1.4
million for the six months ended December 31, 1999.
As of December 31, 1999, the Company had cash, cash equivalents and short-term
investments of $283.6 million, working capital of $255.5 million, and $100
million of long-term debt. Cash equivalents are comprised primarily of
investment-grade commercial paper, U.S. federal, state and political subdivision
obligations with varying terms of three months or less. The Company anticipates
capital expenditures of approximately $30 million for its 2000 fiscal year. The
Company intends to continue to review potential acquisitions and business
alliances that it believes would enhance its growth and profitability.
From time to time, in the normal course of business, various claims are made
against the Company. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position of the Company.
The Company believes that its current cash and short-term investment balances,
and the funds generated from its operations, if any, will be sufficient to
finance the Company's business for at least the next year.
-16-
<PAGE> 18
Hyperion Solutions Corporation
Part II. Other Information
ITEM 1. LEGAL PROCEEDINGS
On April 16, 1996, Gentia Software filed an action against the Company in the
United States District Court for the District of Massachusetts (the
"Massachusetts action") seeking a declaratory judgment that U.S. Patent No.
5,359,724 (the "`724 patent"), owned by the Company, is invalid and not
infringed by Gentia Software's products. On April 18, 1996, the Company filed an
action against Gentia Software in the United States District Court for the
Northern District of California (the "California action") alleging that Gentia
Software infringes the `724 patent, and seeking a permanent injunction and
monetary damages, including treble damages. On May 13, 1996, the Company filed a
motion to transfer the Massachusetts action to California, which was granted on
November 18, 1996. The Company filed its answer and a counterclaim for patent
infringement in the transferred case on December 12, 1996. On April 7, 1997, the
Court consolidated both actions into a single case pending in the United States
District Court for the Northern District of California. On January 23, 2000, the
Company and Gentia Software entered into a Settlement Agreement terminating the
lawsuit, including both consolidated actions. Under the Settlement Agreement,
Gentia Software agreed to remove certain functionality from its software, and
both the Company and Gentia Software dismissed their claims against the other.
Other terms of the Settlement Agreement are confidential.
On July 11, 1997, Gentia Software filed a request for reexamination of the `724
patent with the United States Patent and Trademark Office (the "PTO"). On
September 11, 1997, the PTO granted the request for reexamination. On February
27, 1998, Gentia Software filed a request for a second reexamination of the `724
patent with the PTO. On May 22, 1998, the PTO granted that request for
reexamination which was later consolidated with the first reexamination. On
March 31, 1999, the PTO issued a non-final office action rejecting the claims of
the `724 patent. Hyperion filed its response to the office action on May 31,
1999. No final office action has been issued by the Patent Office.
From time to time, in the normal course of business, various claims are made
against the Company. At this time, in the opinion of management, there are no
pending claims the outcome of which is expected to result in a material adverse
effect on the financial position of the Company.
-17-
<PAGE> 19
Hyperion Solutions Corporation
Part II. Other Information (continued)
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
- ----------- -----------
10.1 - Employment Agreement with Jeffrey R. Rodek, dated October 11,
1999
10.2 - Restricted Stock Award Agreement with Jeffrey R. Rodek, dated
October 11, 1999
10.3 - Secured Promissory Note with Jeffrey R. Rodek, dated
October 11, 1999
10.4 - Employment Offer Letter with Michael L. Sternad, dated
October 11, 1999
10.5 - Amended and Restated Agreement between James A. Perakis and
Hyperion Solutions Corporation, dated January 1, 1999
10.6 - Hyperion Solutions Corporation 1999 Stock Option Plan
The Company did not file any reports on Form 8-K during the three-month period
ended December 31, 1999.
-18-
<PAGE> 20
Hyperion Solutions Corporation
Form 10-Q for the three-month period ended December 31, 1999
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hyperion Solutions Corporation
/s/ Michael L. Sternad 2/10/2000
--------------------------------------------------------
Michael L. Sternad Date
Chief Financial Officer
-19-
<PAGE> 1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of October 11, 1999, (the
"Effective Date") by and between JEFFREY R. RODEK (the "Employee") and HYPERION
SOLUTIONS CORPORATION, a Delaware corporation (the "Company").
1. 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 Chief Executive Officer, reporting to the Board of Directors. In
addition, the Company agrees to elect the Employee as Chairman of the Board of
Directors promptly following his acceptance of the terms of this Agreement. It
is expected that the Employee's primary office will be in Sunnyvale, California,
at the Company's headquarters.
(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 (which shall not be unreasonably withheld), the Employee
shall not render services in any capacity to any other person or entity and
shall not act as a sole proprietor, partner or managing member of any other
person or entity or as a shareholder owning more than one percent of the stock
of any other corporation. The foregoing, however, shall not preclude the
Employee from engaging in reasonable community, school or charitable activities.
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.
2. COMPENSATION.
(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 $400,000. 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.").
(b) INCENTIVE BONUSES. Commencing with the Company's
fiscal year ending June 30, 2002, the Employee shall be eligible to be
considered for an annual incentive
<PAGE> 2
bonus with a target amount equal to 50% of the Employee's Base Compensation with
the potential for a greater amount at the discretion of the Company's Board of
Directors (the "Board") or its Compensation Committee in the event of
exceptional performance. Such bonus (if any) shall be awarded based on objective
or subjective criteria established in advance by the Board or its Compensation
Committee. The determinations of the Board or such Committee with respect to
such bonus shall be final and binding.
(c) RESTRICTED STOCK. The Company hereby grants the
Employee 100,000 shares of the Company's Common Stock, subject to certain
restrictions (the "Restricted Stock"), at a purchase price equal to its par
value of $0.001 per share, subject to the following additional terms:
(i) The aggregate purchase price has been paid
by, or on behalf of, the Employee.
(ii) The Restricted Stock is subject to the
terms of an agreement (the "Restricted Stock Agreement") that shall be
presented to the Employee by the officers of the Company within ten
(10) days of the Effective Date containing terms substantially similar
to those of this Agreement and, where applicable, of the Company's 1995
Stock Option/Stock Issuance Plan as amended and restated as of August
21, 1998 (the "Option/Issuance Plan"), a copy of which has been
provided to the Employee.
(iii) The Employee's interest will become fully
vested and all restrictions will lapse on 6,250 shares on the day
corresponding to the Effective Date of each successive third month
following the Effective Date, so that the Employee's interest will
become fully vested in all of the shares of Restricted Stock on the
anniversary of the Effective Date in 2003.
(iv) As of the Effective Date, the Employee has
full stockholder rights with respect to the shares of Restricted Stock
including the right to vote the shares and to receive dividends,
whether or not his interest in such shares is vested, provided however
that should the Employee cease to remain in service to the Company
while holding one or more unvested shares of Restricted Stock, such
unvested shares will be immediately surrendered to the Corporation for
cancellation and the Employee will have no further stockholder rights
with respect to such unvested shares.
(v) In the event of a Change in Control or
Corporate Transaction, as those terms are defined in the
Option/Issuance Plan, unvested shares of Restricted Stock shall
accelerate to the same extent that options are accelerated under the
Option/Issuance Plan. Additionally, the terms of the loan to the
Employee and of the Note will not be affected by such Change in Control
or Corporate Transaction, so that the Company or the successor
corporation, whichever is applicable, will continue to lend to the
Employee such funds as are described herein upon acceleration or upon
vesting of Employee's interest in the securities to the extent such
acceleration occurs.
2
<PAGE> 3
(d) LOAN. If the Employee elects treatment under
Section 83(b) of the Internal Revenue Code for income he may be deemed to have
received in connection with his purchase of all of the shares of Restricted
Stock, the Company will loan the Employee One Million Dollars ($1,000,000.00) in
exchange for a full-recourse promissory note from the Employee (the "Note"),
subject to the following terms and conditions:
(i) The Company will fund such loan to the
Employee in the principal amount no later than fifteen (15) business
days following the Employee's purchase of the Restricted Stock.
(ii) The Note will accrue interest at the
applicable federal rate for mid-term loans of 6.02%, compounded
annually, and shall have a term of six (6) years. Payment on the
outstanding principal and all accrued interest will be due on the
maturity date. The Note will be secured by the Restricted Stock and/or
such other collateral (if any) as the officer executing the security
agreement deems appropriate. In the event that the Employee terminates
his service with the Company before the term of the Note has lapsed,
the Note will become due and payable in full within thirty (30) days of
such termination.
(e) STOCK OPTIONS. The Company hereby agrees grant
to the Employee, as of the Effective Date, options to purchase 1,100,000 shares
of the Corporation's Common Stock, 500,000 of which (the "Plan Options") are to
be granted pursuant to the Option/Stock Issuance Plan and 600,000 of which (the
"Non-Plan Options") are to be granted under an option agreement between the
Corporation and the Employee, which agreement is attached as EXHIBIT A (the
"Option Agreement"). All of the granted options shall be subject to the
following terms:
(i) The Plan Options shall be considered
Incentive Stock Options to the maximum extent permitted in each
calendar year under Section 422(d) of the Internal Revenue Code of
1986, as amended. All other of the options granted shall be
non-statutory stock options.
(ii) All options shall have a term of ten (10)
years from the Effective Date, subject to earlier termination following
the optionee's cessation of service with the Company. The exercise
price of the options granted shall be equal to the closing price per
share on the Effective Date, as such price is reported by the Nasdaq
Stock Market, which price is deemed for purposes of the Option/Issuance
Plan and the Option Agreement to be the fair market value per share of
Common Stock as of the Effective Date.
(iii) One-quarter of the shares covered by such
options shall become exercisable on the anniversary of the Effective
Date and 1/48 of the shares covered by such options shall become
exercisable upon the day corresponding to the Effective Date of each of
the thirty-six months following the first anniversary of the Effective
Date, so that the options will be fully exercisable on the fourth
anniversary of the Effective Date in 2003.
3
<PAGE> 4
(iv) Should the Employee for any reason (other
than for Cause, as defined in Section 6 of this Agreement) cease to
remain in Service (as defined in the applicable option agreement) to
the Corporation while such options are outstanding, then the Employee
shall have a period of time as specified in the option agreements for
the Plan Options and the Non-Plan Options during which to exercise such
options, but in no event shall such options be exercisable at any time
after their expiration date.
(v) In each fiscal year of the Company that the
Employee chooses to exercise such options, he shall exercise those
options that are exercisable in the following order:
(A) First, the Employee shall exercise
exercisable Non-Plan Options until the aggregate spread
between the exercise price and the fair market value of option
shares on the date of exercise is equal to any excess of One
Million Dollars ($1,000,000.00) over the amount of
compensation other than from exercise of Plan Options that the
Employee reasonably expects to receive in such fiscal year.
(B) Second, the Employee shall exercise
exercisable Plan Options.
(C) The Employee shall not exercise
additional Non-Plan Options in such fiscal year until he has
exercised all of his then exercisable Plan Options.
(vi) The remaining terms and conditions of such
Plan Options shall be substantially as set forth in the Company's
standard form option agreement and the Option/Issuance Plan and the
remaining terms and conditions of the Non-Plan options are as set forth
in the Option Agreement in EXHIBIT A.
3. VACATION AND EMPLOYEE BENEFITS. During the term
of his Employment, the Employee shall be eligible for four weeks of paid
vacation per year of Employment. During the term of his Employment, the Employee
shall be eligible to participate in any employee benefit plans maintained by the
Company for senior executives, 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. In addition, the Company will
reimburse Employee for the costs of membership in a health club of his choice.
4. BUSINESS EXPENSES. During the term of his
Employment, the Employee shall be authorized to incur necessary and reasonable
travel (including first class air 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. For a period of two years from the date of this
Agreement, the Company will also reimburse Employee for all travel between his
family residence in Southern California and Hyperion locations in conjunction
with Company business and provide Employee
4
<PAGE> 5
with temporary living arrangements near such office of the Company as shall be
agreed upon by the Board and the Employee. Should Employee decide within the
first two years of his Employment to relocate his family to the vicinity of such
office of the Company as shall be agreed upon by the Board and the Employee, the
Company will reimburse Employee for all reasonable and customary expenses
associated with the relocation. This includes, but is not limited to, closing
costs associated with the sale of and purchase of a home, mortgage loan closing
costs and moving costs.
5. 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 Date until the earlier of:
(i) The close of the applicable Initial Term
or Renewal Period, as determined under Subsection (b) below; or
(ii) The date when the Employee's Employment
terminates pursuant to Subsection (c) below.
(b) INITIAL TERM AND RENEWAL PERIODS. The initial
term of this Agreement shall end on October 11, 2001 (the "Initial Term").
Thereafter this Agreement shall automatically be renewed for successive 12-month
periods (the "Renewal Periods"), unless either party has given the other party
written notice of non-renewal not less than 90 days prior to the close of the
Initial Term or Renewal Period then in effect.
(c) EARLY TERMINATION. The Employee may terminate
his Employment at any time other than under Section 5(b) and for any reason (or
no reason) by giving the Company 30 days advance notice in writing. 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 30 days advance
notice in writing or, at the Company's option, pay in lieu of some or all of the
notice period. The Company may also, subject to applicable laws, terminate the
Employee's active Employment due to Disability by giving the Employee notice in
writing. For all purposes under this Agreement, "Disability" shall mean a
"disability" as defined by the Americans with Disabilities Act that renders the
Employee unable to perform one or more of the essential functions of his job and
which the Company is unable to accommodate reasonably without undue hardship.
The Employee's Employment shall terminate automatically in the event of his
death.
(d) EMPLOYMENT AT WILL. At all times, 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.
(e) RIGHTS AND OBLIGATIONS UPON TERMINATION. Except
as expressly
5
<PAGE> 6
provided in Section 6, upon the termination of the Employee's Employment
pursuant to this Section 5, the Employee shall only be entitled to the
compensation, benefits and reimbursements described in Sections 2, 3 and 4 for
the period preceding the effective date of the termination. No incentive bonus
under Section 2(b) shall be payable for the year in which the Employee's
Employment terminates, unless the Employee is terminated without Cause, in which
the case the Employee shall be entitled to the payment of a prorated bonus for
such year. The payments under this Agreement shall fully discharge all
compensatory obligations of the Company to the Employee. The termination of this
Agreement shall not limit or otherwise affect the Employee's obligations under
Section 7. The Employee will also be required to repay the Note pursuant to
Section 2(d)(ii).
(f) COVENANT. Employee hereby agrees to resign
immediately upon the request of the Company from all offices and directorships
he may hold with the Company or any of its affiliates upon the termination of
his Employment for any reason.
6. TERMINATION BENEFITS.
(a) GENERAL MUTUAL RELEASE. Within seven (7) days of
the Employee's termination date, the Employee shall execute 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 the
Company also agrees to provide the Employee with the same general release and
agreement for the benefit of the Employee.
(b) SEVERANCE PAY. Any other provision of this
Agreement notwithstanding, this Section (b) and Section (c) below shall not
apply unless (x) the Employee has executed the general release pursuant to
subsection (a) above, and (y) the Employee has agreed not to (and does not)
prosecute any legal action or other proceeding based upon any of such claims. If
such conditions are met, the Company shall pay the Employee his Base
Compensation for a thirty (30)-month period following the effective date of the
termination of his Employment as a full-time employee (the "Continuation
Period"), provided the Employee does not breach any provision of this Agreement
and:
(i) The Company terminates the Employee's
Employment as a full-time employee under Section 5(b) or Section 5(c)
for any reason other than Cause, Disability or death; or
(ii) The Employee resigns his Employment as
a full-time employee for Good Reason within 12 months following a
Change in Control, as defined below.
The Base Compensation under this Subsection (b) 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.
The Company reserves the right to pay such severance pay to the Employee in any
combination of the following: x) cash; y) by accelerating vesting in some or all
of those shares of Restricted Stock that are unvested as of the termination
date; and z) by accelerating vesting in some or all of
6
<PAGE> 7
such stock options granted to the Employee that remain unvested as of the
termination date.
If the Company so chooses to accelerate vesting of either or both the Restricted
Stock and such stock options, the value of such Restricted Stock or stock option
shares will be calculated using the average of the closing trade price of the
Company's Common Stock for the twenty (20) trading days preceding the Employee's
termination date (the "Average Price"). The value of such severance pay which
the Company chooses to pay in the form of such accelerated Restricted Stock, if
any, will be equal to the number of shares so accelerated multiplied by the
excess of the Average Price over $0.001. The value of such severance pay which
the Company chooses to pay in the form of such accelerated stock option shares,
if any, will be equal to the number of shares so accelerated multiplied by the
excess of the Average Price over the exercise price of the stock option shares.
(c) EMPLOYEE BENEFITS. If Subsection (b) above
applies, the Company shall continue the coverage of the Employee and his
dependents (if applicable) under the employee benefit plans described in Section
3 during the Continuation Period. To the extent that such plans or the insurance
contracts or provider agreements associated with such plans do not permit the
extension of the Employee's coverage following the termination of his active
employment, the Company shall pay the Employee cash in an amount equal to the
cost to the Company of the coverage that cannot be provided. The cash payments
shall be made in accordance with Subsection (b) above.
(d) COBRA. 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 date of the "qualifying event" for
purposes of COBRA shall be the Employee's last day of active employment.
(e) DEFINITION OF "CAUSE." For all purposes under
this Agreement, "Cause" shall mean:
(i) The Employee's failure to perform in a
satisfactory fashion one or more reasonable and lawful duties assigned
to the Employee by the Company under this Agreement, if such failure
continues for 15 days or more after the Company has given the Employee
written notice describing such failure and advising him of the
consequences of such failure under this Agreement, provided that such
notice shall be required only with respect to the first failure;
(ii) The Employee's conviction of, or a plea
of "guilty" or "no contest" to, a felony under the laws of the United
States or any state thereof;
(iii) The Employee's failure or refusal to
carry out the reasonable directives of the Company, if such failure
continues for three days or more after the Company has given the
Employee written notice describing such failure and advising him of the
consequences of such failure under this Agreement, provided that such
notice shall be required only with respect to the
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<PAGE> 8
first failure;
(iv) 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;
(v) Threats or acts of violence directed at any
present, former or prospective employee, independent contractor,
vendor, customer or business partner of the Company (or any of the
Company's affiliates); or
(vi) The commission of any act of fraud,
embezzlement or dishonesty by Employee, any unauthorized use or
disclosure by Employee of confidential information or trade secrets of
the Company (or any of the Company's affiliates), or any other
intentional misconduct by Employee affecting the business or affairs of
the Company (or any of the Company's affiliates) in a material manner.
(f) DEFINITION OF "CHANGE IN CONTROL." For all
purposes under this Agreement except where indicated in Section 2(c), "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 persons who were not stockholders of the
Company immediately prior to such transaction own immediately after
such transaction 50% or more of the voting power of the outstanding
securities of each of (A) the continuing or surviving entity or (B) any
direct or indirect parent corporation of such continuing or surviving
entity;
(ii) The sale, transfer or other disposition of
all or substantially all of the Company's assets, if persons who were
not stockholders of the Company immediately prior to such transaction
own immediately after such transaction 50% or more of the voting power
of the outstanding securities of each of (A) the continuing or
surviving entity or (B) any direct or indirect parent corporation of
such continuing or surviving entity;
(iii) A change in the composition of the Board,
as a result of which fewer than a majority of the incumbent directors
are directors who either (A) 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 (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;
(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 (the "Exchange Act")),
directly or indirectly, of
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<PAGE> 9
securities of the Company representing more than 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
the Exchange 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; or
(v) Any change in control required to be
reported by Item 1 of Form 8-K of the Securities and Exchange
Commission or by Item 6(e) of Schedule 14A set forth in Rule 14a-101
under the Exchange Act (or by any successor of either).
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.
(g) DEFINITION OF "GOOD REASON." For all purposes
under this Agreement, "Good Reason" shall mean:
(i) A significant diminution in the nature or
scope of the Employee's authority, duties or responsibilities in effect
immediately prior to the Change in Control;
(ii) Any reduction in the rate of the Employee's
Base Compensation in effect immediately prior to the Change in Control
or a reduction of 25% or more in the value of the Employee's aggregate
compensation and benefits in effect immediately prior to the Change in
Control;
(iii) The relocation of the Employee's principal
place of employment to a site more than 25 miles removed from his
principal place of employment immediately prior to the Change in
Control; or
(iv) An increase of 25% or more in the
average amount of time per month that the Employee is required to be
away from his principal place of employment, relative to the average
amount of time per month that the Employee was required to be away from
his principal place of employment immediately prior to the Change in
Control.
7. 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
9
<PAGE> 10
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 that is of the nature of the business being provided by the Company, or
of any of the Company's affiliates, with whom the Employee had contact during
his Employment. During the portion of such period following termination of the
Employee, 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.
(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 6(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 in any of the locations listed in
Schedule A attached hereto. 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 1% 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.
(d) NON-DISPARAGEMENT. 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, (i) the Employee
shall not directly or indirectly, personally or through others, disparage the
Company, its affiliates, its management, officers, employees or members of its
Board of Directors and (ii) the Company shall not, and it shall take reasonable
steps to cause its management and members of its Board of Directors not to,
directly or indirectly, personally or through others, disparage the Employee,
except that such disclosures by the Company that are made (a) to fulfill its
obligations under federal securities statutes and rules; (b) in response to a
valid order of a court or other governmental body of the United States or any
political subdivision thereof, or (c) pursuant to other of the Company's or such
individuals' duties required by law, will not violate the Company's obligation
under this subsection (d).
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<PAGE> 11
(e) INJUNCTIVE RELIEF. The Employee acknowledges and
agrees that his failure to perform any of his covenants in this Section 7 would
cause irreparable injury to the Company and cause damages to the Company that
would be difficult or impossible to ascertain or quantify. Accordingly, without
limiting any other remedies that may be available with respect to any breach of
this Agreement, the Employee consents to the entry of an injunction to restrain
any breach of this Section 7, without any requirement to post a bond.
(f) SURVIVAL. The covenants in this Section 7 shall
survive any termination or expiration of this Agreement and the termination of
the Employee's Employment with the Company for any reason.
8. 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.
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 (i) personally delivered, (ii) delivered to the U.S. Postal
Service for delivery by registered or certified mail or (iii) delivered to a
comparable private service offering guaranteed deliveries in the ordinary course
of its business. Notice under clauses (ii) and (iii) shall be valid only if
delivery charges have been prepaid and a return receipt will be furnished. In
the case of the Employee, notice under clauses (ii) and (iii) 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, notice under clauses (ii) and (iii) shall
be addressed to its corporate headquarters and 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. No other
agreements, representations or understandings (whether oral or written and
whether express or implied)
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<PAGE> 12
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 between the Employee
and the Company 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. If any provision hereof is unenforceable in any jurisdiction,
it shall be adjusted rather than voided so that it may be enforced to the
maximum extent possible.
(g) ARBITRATION. Subject to Section 7(e), 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 Clara 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.
(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
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case of the Company by its duly authorized officer, as of the day and year first
above written.
HYPERION SOLUTIONS CORPORATION
By: /s/ Stephen Imbler
---------------------------------
Title:
------------------------------
/s/ Jeffrey R. Rodek
------------------------------------
Jeffrey R. Rodek
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<PAGE> 14
EXHIBIT A TO OCTOBER 11, 1999 EMPLOYMENT AGREEMENT WITH JEFFREY R. RODEK
OPTION AGREEMENT WITH JEFFREY R. RODEK
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<PAGE> 15
HYPERION SOLUTIONS CORPORATION
STOCK OPTION AGREEMENT
- RELATING TO AN OPTION GRANT OF 500,000 SHARES
PURSUANT TO THE HYPERION SOLUTIONS CORPORATION 1995 STOCK OPTION/STOCK
ISSUANCE PLAN AS AMENDED AND RESTATED AS OF AUGUST 21, 1998. -
EFFECTIVE AS OF OCTOBER 11, 1999
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or the board
of directors of any Parent or Subsidiary and consultants and other independent
advisors who provide services to the Corporation (or any Parent or Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.
4. DATES OF EXERCISE.
i) This option shall become exercisable for the
Option Shares in one or more installments as specified in the
Grant Notice. As the option becomes exercisable for such
installments, those installments shall accumulate and the
option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination
of the option term under Paragraph 5 or 6.
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<PAGE> 16
ii) In each fiscal year of the Company that the
Optionee chooses to exercise such options, he shall exercise
those options that are exercisable in the following order:
(A) First, the Optionee shall exercise
exercisable Non-Plan Options until the aggregate
spread between the exercise price and the fair market
value of option shares on the date of exercise is
equal to any excess of One Million Dollars
($1,000,000.00) over the amount of compensation other
than from exercise of Plan Options that the Optionee
reasonably expects to receive in such fiscal year.
(B) Second, the Optionee shall exercise
exercisable Plan Options.
(C) The Optionee shall not exercise
additional Non-Plan Options in such fiscal year until
he has exercised all of his then exercisable Plan
Options.
5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Cause) while this option is
outstanding, then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service) ), or such
period of time greater than three (3) months as may be determined by
the Board to be in the best interests of the Corporation, during which
to exercise this option, but in no event shall this option be
exercisable at any time after the Expiration Date.
(ii) Should Optionee die while this option is outstanding,
then the personal representative of Optionee's estate or the person or
persons to whom the option is transferred pursuant to Optionee's will
or in accordance with the laws of descent and distribution shall have
the right to exercise this option. Such right shall lapse and this
option shall cease to be outstanding upon the earlier of (A) the
expiration of the twelve (12)- month period measured from the date of
Optionee's death or (B) the Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then Optionee shall have a
period of twelve (12) months (commencing with the date of such
cessation of Service) during which to exercise this option. In no event
shall this option be exercisable at any time after the Expiration Date.
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<PAGE> 17
(iv) Should Optionee's Service be terminated for Cause, then
this option shall terminate immediately and cease to remain
outstanding.
(v) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the
number of vested Option Shares for which the option is exercisable at
the time of Optionee's cessation of Service. Upon the expiration of
such limited exercise period or (if earlier) upon the Expiration Date,
this option shall terminate and cease to be outstanding for any vested
Option Shares for which the option has not been exercised. To the
extent Optionee is not vested in the Option Shares at the time of
Optionee's cessation of Service, this option shall immediately
terminate and cease to be outstanding with respect to those shares.
(vi) In the event of a Corporate Transaction, the provisions
of Paragraph 6 shall govern the period for which this option is to
remain exercisable following Optionee's cessation of Service and shall
supersede any provisions to the contrary in this paragraph.
6. SPECIAL ACCELERATION OF OPTION.
a. In the event of a Corporate Transaction, the
exercisability of this option, to the extent outstanding at
such time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall,
immediately prior to the effective date of the Corporate
Transaction, become exercisable for any or all of the Option
Shares at the time subject to this option as fully-vested
shares of Common Stock. No such acceleration of this option,
however, shall occur if and to the extent: (i) this option is,
in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to
be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof)
or (ii) this option is to be replaced with a cash incentive
program of the successor corporation which preserves the
spread existing on the Option Shares for which this option is
not exercisable at the time of the Corporate Transaction (the
excess of the Fair Market Value of such Option Shares over the
aggregate Exercise Price payable for such shares) and provides
for subsequent pay-out in accordance with the same exercise
schedule in effect for the option pursuant to the option
exercise schedule set forth in the Grant Notice. The
determination of option comparability under clause (i) shall
be made by the Plan Administrator, and such determination
shall be final, binding and conclusive.
b. Immediately following the Corporate Transaction,
this option, to the extent not previously exercised, shall
terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.
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<PAGE> 18
c. If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately
adjusted, immediately after such Corporate Transaction, to
apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate
Exercise Price shall remain the same.
d. Upon an Involuntary Termination of Optionee's
Service within eighteen (18) months following a Corporate
Transaction in which this option is assumed or replaced, the
exercisability of this option, to the extent outstanding at
such time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall immediately
become fully exercisable for all the Option Shares at the time
subject to this option as fully-vested shares of Common Stock
and may be exercised for any or all of those shares at any
time prior to the earlier of (i) the Expiration Date or (ii)
the expiration of the one (1)-year period measured from the
effective date of the Involuntary Termination.
e. This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall not
have any stockholder rights with respect to the Option Shares until such person
shall have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.
9. MANNER OF EXERCISING OPTION.
a. In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the
option) must take the following actions:
(i) Execute and deliver to the Corporation a Notice
of Exercise for the Option Shares for which the option is
exercised.
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<PAGE> 19
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation;
(B) a promissory note payable to the
Corporation, but only to the extent authorized by the
Plan Administrator in accordance with Paragraph 13;
(C) shares of Common Stock held by Optionee
(or any other person or persons exercising the
option) for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on
the Exercise Date; or
(D) through a special sale and remittance
procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall
concurrently provide irrevocable written instructions
(I) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and
remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to
cover the aggregate Exercise Price payable for the
purchased shares plus all applicable Federal, state
and local income and employment taxes required to be
withheld by the Corporation by reason of such
exercise and (II) to the Corporation to deliver the
certificates for the purchased shares directly to
such brokerage firm in order to complete the sale
transaction.
Except to the extent the sale and remittance
procedure is utilized in connection with the option exercise, payment
of the Exercise Price must accompany the Notice of Exercise delivered
to the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising
the option (if other than Optionee) have the right to
exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all
Federal, state and local income and employment tax
withholding requirements applicable to the option
exercise.
b. As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other
person or persons
PAGE 5
<PAGE> 20
exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
c. In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
a. The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock
exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock may be listed for trading at the time of such exercise and
issuance.
b. The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant
to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which
such approval shall not have been obtained. The Corporation, however,
shall use its best efforts to obtain all such approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or delivered to
the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on the
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
13. FINANCING. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a promissory note.
The terms of any such promissory note (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.(1)
(1) Authorization of payment of the Exercise Price by a promissory note may,
under currently proposed Treasury Regulations, result in the loss of
incentive stock option treatment under the Federal tax laws.
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14. CONSTRUCTION. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects limited
by and subject to the terms of the Plan. All decisions of the Plan Administrator
with respect to any question or issue arising under the Plan or this Agreement
shall be conclusive and binding on all persons having an interest in this
option.
15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to such excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the
event this option is designated an Incentive Option in the Grant Notice, the
following terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for favorable
tax treatment as an Incentive Option if (and to the extent)
this option is exercised for one or more Option Shares: (A)
more than three (3) months after the date Optionee ceases to
be an Employee for any reason other than death or Permanent
Disability or (B) more than twelve (12) months after the date
Optionee ceases to be an Employee by reason of Permanent
Disability.
(ii) No installment under this option shall qualify
for favorable tax treatment as an Incentive Option if (and to
the extent) the aggregate Fair Market Value (determined at the
Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder would, when added to the
aggregate value (determined as of the respective date or dates
of grant) of any earlier installments of the Common Stock and
any other securities for which this option or any other
Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should such One
Hundred Thousand Dollar ($100,000) limitation be exceeded in
any calendar year, this option shall nevertheless become
exercisable for the excess shares in such calendar year as a
Non-Statutory Option.
(iii) Should the exercisability of this option be
accelerated upon a Corporate Transaction, then this option
shall qualify for favorable tax treatment as an Incentive
Option only to the extent the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for
PAGE 7
<PAGE> 22
which this option first becomes exercisable in the calendar
year in which the Corporate Transaction occurs does not, when
added to the aggregate value (determined as of the respective
date or dates of grant) of the Common Stock or other
securities for which this option or one or more other
Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become
exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the
applicable One Hundred Thousand Dollar ($100,000) limitation
be exceeded in the calendar year of such Corporate
Transaction, the option may nevertheless be exercised for the
excess shares in such calendar year as a Non-Statutory Option.
(iv) Should Optionee hold, in addition to this
option, one or more other options to purchase Common Stock
which become exercisable for the first time in the same
calendar year as this option, then the foregoing limitations
on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such
options are granted.
18. COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument.
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<PAGE> 23
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
HYPERION SOLUTIONS CORPORATION
/s/ Stephen Imbler
By:________________________
Stephen Imbler
Name:______________________
Title:_____________________
/s/ Jeffrey R. Rodek
___________________________
Jeffrey R. Rodek
Address:___________________
___________________
___________________
PAGE 9
<PAGE> 24
EXHIBIT I
NOTICE OF EXERCISE
- RELATING TO AN OPTION GRANT OF 500,000 SHARES
PURSUANT TO THE HYPERION SOLUTIONS CORPORATION 1995 STOCK OPTION/STOCK
ISSUANCE PLAN AS AMENDED AND RESTATED AS OF AUGUST 21, 1998. -
I hereby notify Hyperion Solutions Corporation (the
"Corporation") that I elect to purchase shares of the Corporation's Common
Stock (the "Purchased Shares") at the option exercise price of $ per share
(the "Exercise Price") pursuant to that certain option (the "Option") granted to
me under the Corporation's 1995 Stock Option /Stock Issuance Plan on ,
199 .
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
I hereby certify that this Exercise Notice is being executed
in accordance with the order of exercise specified in Section 2(e)(v) of the
Employment Agreement Between the Corporation and the Optionee dated as of
October 11, 1999.
_______________________, 199__
Date
______________________
Optionee
Address:______________
______________________
Print name in exact manner
it is to appear on the
stock certificate: _______________________
Address to which certificate
is to be sent, if different
from address above: _______________________
_______________________
_______________________
Social Security Number: _______________________
PAGE 10
<PAGE> 25
Optionee Number: _______________________
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CAUSE shall mean: (i) The Optionee's failure to perform in a
satisfactory fashion one or more reasonable and lawful duties assigned to the
Optionee by the Corporation under this Agreement, if such failure continues for
15 days or more after the Corporation has given the Optionee written notice
describing such failure and advising him of the consequences of such failure
under this Agreement; provided that such notice shall be required only with
respect to the first failure;
(ii) The Optionee's conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the
United States or any state thereof;
(iii) The Optionee's failure or refusal to carry out
the reasonable directives of the Corporation, if such failure
continues for three days or more after the Corporation has
given the Optionee written notice describing such failure and
advising him of the consequences of such failure under this
Agreement; provided that such notice shall be required only
with respect to the first failure;
(iv) Any breach of this Agreement, the Proprietary
Information and Inventions Agreement between the Optionee and
the Corporation, or any other agreement between the Optionee
and the Corporation;
(v) Threats or acts of violence directed at any
present, former or prospective employee, independent
contractor, vendor, customer or business partner of the
Corporation (or any of the Corporation's affiliates); or
(vi) The commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure
by Optionee of confidential information or trade secrets of
the Corporation (or any of the Corporation's affiliates), or
any other intentional misconduct by Optionee affecting the
business or affairs of the Corporation (or any of the
Corporation's affiliates) in a material manner.
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<PAGE> 26
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all
or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
G. CORPORATION shall mean Hyperion Solutions Corporation, a Delaware
corporation.
H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per share as specified in
the Grant Notice.
K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be
the closing selling price per share of Common Stock on the
date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question on the Stock Exchange
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<PAGE> 27
determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there
is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such
quotation exists.
M. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.
N. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. INCENTIVE OPTION shall mean an option which satisfies the requirements
of Code Section 422.
P. INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service which occurs by reason of:
(i) Optionee's involuntary dismissal or discharge by
the Corporation for reasons other than for Cause, or
(ii) Optionee's voluntary resignation following (A) A
significant diminution in the nature or scope of the
Optionee's authority, duties or responsibilities in effect
immediately prior to the Change in Control; (B) Any reduction
in the rate of the Optionee's Base Compensation in effect
immediately prior to the Change in Control or a reduction of
25% or more in the value of the Optionee's aggregate
compensation and benefits in effect immediately prior to the
Change in Control; (C) The relocation of the Optionee's
principal place of employment to a site more than 25 miles
removed from his principal place of employment immediately
prior to the Change in Control; or (D) An increase of 25% or
more in the average amount of time per month that the Optionee
is required to be away from his principal place of employment,
relative to the average amount of time per month that the
Optionee was required to be away from his principal place of
employment immediately prior to the Change in Control.
Q. NON-PLAN OPTIONS shall mean the Option Shares granted to the Optionee
pursuant to the Option Agreement Between the Corporation and the Optionee
Relating to an Option Grant of 600,000 Shares, dated as of October 11, 1999; and
any other Option Shares granted to the Optionee that were not granted pursuant
to the Plan or any other such plan adopted by the Corporation.
R. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
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<PAGE> 28
S. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
T. OPTION SHARES shall mean the number of shares of Common Stock subject
to stock options granted to the Optionee by the Corporation.
U. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
V. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
W. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
X. PLAN shall mean the Corporation's 1995 Stock Option/Stock Issuance
Plan.
Y. PLAN ADMINISTRATOR shall mean either the Board or a committee of Board
members, to the extent the committee is at the time responsible for the
administration of the Plan.
Z. PLAN OPTIONS shall mean the Option Shares granted pursuant to this
Agreement and any other Option Shares granted to the Optionee under the Plan or
any other such plan adopted by the Corporation.
AA. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
BB. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.
CC. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
PAGE 14
<PAGE> 29
Hyperion Solutions Corporation
HYPERION SOLUTIONS CORPORATION ID: 77-027777
NOTICE OF GRANT OF STOCK OPTIONS 1344 Crossman Avenue
Sunnyvale, CA 94089
OPTION NUMBER: ___________
PLAN: 1995 STOCK OPTION/STOCK
ISSUANCE PLAN
ID: ____________
Notice is hereby given of the following option grant (the "Option") to purchase
shares of the Common Stock of Hyperion Solutions Corporation (the
"Corporation").
Optionee: Jeffrey R. Rodek
Grant Date: October 11, 1999
Vesting Commencement Date: October 11, 1999
Exercise Price: $19.063 per share
Expiration Date: October 11, 2009
Number of Option Shares: 500,000 Total Option Shares
Exercise Schedule: The Option shall become exercisable with
respect to (i) twenty-five percent (25%) of the Total Option
Shares upon Optionee's completion of one (1) year of Service
measured from the Vesting Commencement Date and (ii) the
balance of the Option Shares in successive equal monthly
installments upon Optionee's completion of each of the next
thirty-six (36) months of Service measured from and after the
first anniversary of the Vesting Commencement Date. In no
event shall the Option become exercisable for any additional
Option Shares after Optionee's cessation of Service.
Exercise Order: In each fiscal year of the Corporation that
the Optionee chooses to exercise this option, he shall
exercise this option for those Option Shares that are then
exercisable in conjunction with the Non-Plan Option(s) in the
order of exercise specified in Section 4(ii) of the Stock
Option Agreement between the Corporation and the Optionee
relating to a grant of 500,000 shares (the "Agreement") dated
as of October 11, 1999.
Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the Hyperion Solutions
Corporation 1995 Stock Option/Stock Issuance Plan (the "Plan"). Optionee further
agrees to be bound by the terms of the Plan and the terms of the Option as set
forth in the Agreement.
Optionee hereby acknowledges access to and receipt of the
official prospectus for the Plan via GlobalSource (the Corporation's intranet at
http://globalsource). A copy of the Plan is available upon request made to the
Corporate Secretary at the Corporation's principal offices.
The Option shall be considered an Incentive Stock Option to
the maximum extent permitted in each calendar year under Section 422(d) of the
Internal Revenue Code of 1986, as amended.
No Employment or Service Contract. Nothing in this Notice or
in the attached Stock Option Agreement or Plan shall confer upon Optionee 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 Corporation (or any
Parent or Subsidiary employing or retaining Optionee) or of Optionee, which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have
the meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
HYPERION SOLUTIONS CORPORATION
OPTIONEE
/s/ Jeffrey R. Rodek /s/ Stephen V. Imbler
- ------------------------------ -----------------------------
Stephen V. Imbler
Interim President and CEO
<PAGE> 30
HYPERION SOLUTIONS CORPORATION
STOCK OPTION AGREEMENT
- RELATING TO AN OPTION GRANT OF 600,000 SHARES -
EFFECTIVE AS OF OCTOBER 11, 1999
RECITALS
A. The Compensation Committee has approved this Stock Option Agreement
for the purpose of retaining the services of JEFFREY R. RODEK (the "Optionee").
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is intended to promote the interests
of the Corporation by providing Optionee with the opportunity to acquire a
proprietary interest, or otherwise increase his proprietary interest, in the
Corporation as an incentive for him to remain in the service of the Corporation.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee,
as of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The option granted herein shall be a
Non-Statutory Option. The Option Shares shall be purchasable from time to time
during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, this option may be assigned in
whole or in part during the Optionee's lifetime in accordance with the terms of
a Qualified Domestic Relations Order. The assigned portion may only be exercised
by the person or persons who acquire a proprietary interest in the option
pursuant to such Qualified Domestic Relations Order. The terms applicable to the
assigned portion shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents issued to the
assignee as the Compensation Committee may deem appropriate.
4. DATES OF EXERCISE.
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i) This option shall become exercisable for the Option Shares
in one or more installments as specified in the Grant Notice. As the
option becomes exercisable for such installments, those installments
shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner
termination of the option term under Paragraph 5 or 6.
(ii) In each fiscal year of the Company that the Optionee
chooses to exercise this option, he shall exercise those Option Shares
that are exercisable in the following order:
(A) First, the Optionee shall exercise exercisable
Non-Plan Options until the aggregate spread between the
exercise price and the fair market value of option shares on
the date of exercise is equal to any excess of One Million
Dollars ($1,000,000.00) over the amount of compensation other
than from exercise of Plan Options that the Optionee
reasonably expects to receive in such fiscal year.
(B) Second, the Optionee shall exercise exercisable
Plan Options.
(C) The Optionee shall not exercise additional
Non-Plan Options in such fiscal year until he has exercised
all of his then exercisable Plan Options.
5. CESSATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be outstanding)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Should Optionee cease to remain in Service for
any reason (other than death or for Cause) while this option
is outstanding, then Optionee shall have a period of three (3)
months (commencing with the date of such cessation of
Service), or such period of time greater than three (3) months
as may be determined by the Board to be in the best interests
of the Corporation, during which to exercise this option, but
in no event shall this option be exercisable at any time after
the Expiration Date.
(ii) Should Optionee die while this option is
outstanding, then the personal representative of Optionee's
estate or the person or persons to whom the option is
transferred pursuant to Optionee's will or in accordance with
the laws of descent and distribution shall have the right to
exercise this option. Such right shall lapse and this option
shall cease to be outstanding upon the earlier of (A) the
expiration of the twelve (12)- month period measured from the
date of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then
Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to
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<PAGE> 32
exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.
(iv) Should Optionee's Service be terminated for
Cause, then this option shall terminate immediately and cease
to remain outstanding.
(v) During the limited period of post-Service
exercisability, this option may not be exercised in the
aggregate for more than the number of vested Option Shares for
which the option is exercisable at the time of Optionee's
cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been
exercised. To the extent Optionee is not vested in the Option
Shares at the time of Optionee's cessation of Service, this
option shall immediately terminate and cease to be outstanding
with respect to those shares.
(vi) In the event of a Corporate Transaction, the
provisions of Paragraph 6 shall govern the period for which
this option is to remain exercisable following Optionee's
cessation of Service and shall supersede any provisions to the
contrary in this paragraph.
6. SPECIAL ACCELERATION OF OPTION.
(i) In the event of a Corporate Transaction, the
exercisability of this option, to the extent outstanding at
such time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall,
immediately prior to the effective date of the Corporate
Transaction, become exercisable for any or all of the Option
Shares at the time subject to this option as fully-vested
shares of Common Stock. No such acceleration of this option,
however, shall occur if and to the extent: (x) this option is,
in connection with the Corporate Transaction, either to be
assumed by the successor corporation (or parent thereof) or to
be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof)
or (y) this option is to be replaced with a cash incentive
program of the successor corporation which preserves the
spread existing on the Option Shares for which this option is
not exercisable at the time of the Corporate Transaction (the
excess of the Fair Market Value of such Option Shares over the
aggregate Exercise Price payable for such shares) and provides
for subsequent pay-out in accordance with the same exercise
schedule in effect for the option pursuant to the option
exercise schedule set forth in the Grant Notice. The
determination of option comparability under clause (x) shall
be made by the Compensation Committee, and such determination
shall be final, binding and conclusive.
(ii) Immediately following the Corporate Transaction,
this option, to the extent not previously exercised, shall
terminate and cease to be outstanding, except to the extent
assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.
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<PAGE> 33
(iii) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately
adjusted, immediately after such Corporate Transaction, to
apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to
such Corporate Transaction, and appropriate adjustments shall
also be made to the Exercise Price, provided the aggregate
Exercise Price shall remain the same.
(iv) Upon an Involuntary Termination of Optionee's
Service within eighteen (18) months following a Corporate
Transaction in which this option is assumed or replaced, the
exercisability of this option, to the extent outstanding at
such time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall immediately
become fully exercisable for all the Option Shares at the time
subject to this option as fully-vested shares of Common Stock
and may be exercised for any or all of those shares at any
time prior to the earlier of (x) the Expiration Date or (y)
the expiration of the one (1)-year period measured from the
effective date of the Involuntary Termination.
(v) The Compensation Committee shall have the
discretion, exercisable either at the time the option is
granted or at any time while the option remains outstanding,
to (x) provide for the automatic acceleration of vesting in
this option upon the occurrence of a Change in Control or (y)
condition any such option acceleration (and the termination of
any outstanding repurchase rights) upon the subsequent
Involuntary Termination within a specified period following
the effective date of such Change in Control. Any Option
Shares accelerated in connection with a Change in Control
shall remain fully exercisable until the expiration or sooner
termination of the option term.
(vi) This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares until such
person shall have exercised the option, paid the Exercise Price and become a
holder of record of the purchased shares.
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<PAGE> 34
9. MANNER OF EXERCISING OPTION.
(i) In order to exercise this option with respect to
all or any part of the Option Shares for which this option is
at the time exercisable, Optionee (or any other person or
persons exercising the option) must take the following
actions:
A. Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which
the option is exercised.
B. Pay the aggregate Exercise Price for the
purchased shares in one or more of the following
forms:
a. cash or check made payable to
the Corporation;
b. a promissory note payable to the
Corporation, but only to the extent
authorized by the Compensation Committee in
accordance with Paragraph 13;
c. shares of Common Stock held by
Optionee (or any other person or persons
exercising the option) for the requisite
period necessary to avoid a charge to the
Corporation's earnings for financial
reporting purposes and valued at Fair Market
Value on the Exercise Date; or
d. through a special sale and
remittance procedure pursuant to which
Optionee (or any other person or persons
exercising the option) shall concurrently
provide irrevocable written instructions (x)
to a Corporation-designated brokerage firm
to effect the immediate sale of the
purchased shares and remit to the
Corporation, out of the sale proceeds
available on the settlement date, sufficient
funds to cover the aggregate Exercise Price
payable for the purchased shares plus all
applicable Federal, state and local income
and employment taxes required to be withheld
by the Corporation by reason of such
exercise and (y) to the Corporation to
deliver the certificates for the purchased
shares directly to such brokerage firm in
order to complete the sale transaction.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise delivered to the Corporation in connection
with the option exercise.
C. Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this
option.
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<PAGE> 35
D. Make appropriate arrangements with the Corporation
(or Parent or Subsidiary employing or retaining Optionee) for
the satisfaction of all Federal, state and local income and
employment tax withholding requirements applicable to the
option exercise. Such arrangements may include, but are not
limited to, the following:
a. Stock Withholding: The election to have
the Corporation withhold, from the shares of Common
Stock otherwise issuable upon the exercise of this
option, a portion of those shares with an aggregate
Fair Market Value equal to the percentage of the
Taxes (not to exceed one hundred percent (100%))
designated by the holder.
b. Stock Delivery: The election to deliver
to the Corporation, at the time this option is
exercised or the shares vest, one or more shares of
Common Stock previously acquired by Optionee (other
than in connection with the option exercise
triggering the Taxes) with an aggregate Fair Market
Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the
Optionee.
(ii) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other
person or persons exercising this option) a certificate for the
purchased Option Shares, with the appropriate legends affixed thereto.
(iii) In no event may this option be exercised for any
fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(i) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock
exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock may be listed for trading at the time of such exercise and
issuance.
(ii) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be
necessary to the lawful issuance and sale of any Common Stock pursuant
to this option shall relieve the Corporation of any liability with
respect to the non-issuance or sale of the Common Stock as to which
such approval shall not have been obtained. The Corporation, however,
shall use its best efforts to obtain all such approvals.
11. REGISTRATION. The Company agrees to take all actions necessary
to file with the U.S. Securities and Exchange Commission, within sixty (60) days
from the date of this Agreement, a Registration Statement on Form S-8 with
respect to the shares of the
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<PAGE> 36
Company's common stock issuable upon exercise of the options pursuant to this
Agreement and to use commercially reasonable efforts to maintain the
effectiveness of such registration statement.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns and the legal representatives, heirs
and legatees of Optionee's estate.
13. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. FINANCING. The Compensation Committee may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a promissory note.
The terms of any such promissory note (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Compensation Committee in its sole discretion. Promissory notes may be
authorized with or without security or collateral. In all events, the maximum
credit available to the Optionee may not exceed the sum of (i) the aggregate
option exercise price or purchase price payable for the purchased shares plus
(ii) any Federal, state and local income and employment tax liability incurred
by the Optionee in connection with the option exercise. The Compensation
Committee may, in its discretion, determine that one or more such promissory
notes shall be subject to forgiveness by the Corporation in whole or in part
upon such terms as the Compensation Committee may deem appropriate.
15. CANCELLATION AND REGRANT OF THIS OPTION. The Compensation
Committee shall have the authority to effect, at any time and from time to time,
with the consent of the Optionee, the cancellation of any or all outstanding
Option Shares under this Agreement and to grant in substitution new options
covering the same or different number of shares of Common Stock but with an
exercise price per share based on the Fair Market Value per share of Common
Stock on the new option grant date.
16. CONSTRUCTION. This Agreement and the option evidenced hereby
are made and granted pursuant to resolutions approved by the Compensation
Committee and are in all respects limited by and subject to the terms of such
resolutions.
17. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
7
<PAGE> 37
18. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
8
<PAGE> 38
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
HYPERION SOLUTIONS CORPORATION
By: /s/ Stephen Imbler
--------------------------------------
Name: Stephen Imbler
------------------------------------
Title:
------------------------------------
/s/ Jeffrey R. Rodek
------------------------------------
Jeffrey R. Rodek
Address:
------------------------------------
------------------------------------
------------------------------------
9
<PAGE> 39
EXHIBIT A
NOTICE OF EXERCISE
- RELATING TO AN OPTION GRANT OF 600,000 SHARES -
I hereby notify Hyperion Solutions Corporation (the
"Corporation") that I elect to purchase shares of the Corporation's
Common Stock (the "Purchased Shares") at the option exercise price of $ per
share (the "Exercise Price") pursuant to that certain option (the "Option")
granted to me under the Stock Option Agreement between the Corporation and me
dated October __, 1999.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
I hereby certify that this Exercise Notice is being executed
in accordance with the order of exercise specified in Section 2(e)(v) of the
Employment Agreement Between the Corporation and the Optionee dated as of
October 11, 1999.
, 200__
- ------------------------
Date
----------------------
Optionee
Address:
--------------
----------------------
Print name in exact manner
it is to appear on the
stock certificate: ----------------------
Address to which certificate
is to be sent, if different
from address above: ----------------------
Social Security Number: ----------------------
Employee Number: ----------------------
10
<PAGE> 40
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CAUSE shall mean: (i) The Optionee's failure to perform in a
satisfactory fashion one or more reasonable and lawful duties assigned to the
Optionee by the Corporation under this Agreement, if such failure continues for
15 days or more after the Corporation has given the Optionee written notice
describing such failure and advising him of the consequences of such failure
under this Agreement; provided that such notice shall be required only with
respect to the first failure;
(ii) The Optionee's conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the
United States or any state thereof;
(iii) The Optionee's failure or refusal to carry out
the reasonable directives of the Corporation, if such failure
continues for three days or more after the Corporation has
given the Optionee written notice describing such failure and
advising him of the consequences of such failure under this
Agreement; provided that such notice shall be required only
with respect to the first failure;
(iv) Any breach of this Agreement, the Proprietary
Information and Inventions Agreement between the Optionee and
the Corporation, or any other agreement between the Optionee
and the Corporation;
(v) Threats or acts of violence directed at any
present, former or prospective employee, independent
contractor, vendor, customer or business partner of the
Corporation (or any of the Corporation's affiliates); or
(vi) The commission of any act of fraud, embezzlement
or dishonesty by Optionee, any unauthorized use or disclosure
by Optionee of confidential information or trade secrets of
the Corporation (or any of the Corporation's affiliates), or
any other intentional misconduct by Optionee affecting the
business or affairs of the Corporation (or any of the
Corporation's affiliates) in a material manner.
D. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation
or a person that directly or indirectly
A-1
<PAGE> 41
controls, is controlled by, or is under common control with,
the Corporation), of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender
or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such
stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that
a majority of the Board members ceases, by reason of one or
more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during
such period by at least a majority of the Board members
described in clause (A) who were still in office at the time
the Board approved such election or nomination.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON STOCK shall mean the Corporation's common stock.
G. COMPENSATION COMMITTEE shall mean a subcommittee of the Board composed
of outside members of the Board which makes policy determinations regarding
executive compensation.
H. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all
or substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
I. CORPORATION shall mean Hyperion Solutions Corporation, a Delaware
corporation.
J. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
K. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
A-2
<PAGE> 42
L. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.
M. EXERCISE PRICE shall mean the exercise price per share as specified in
the Grant Notice.
N. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
O. FAIR MARKET VALUE per share of Common Stock on any relevant date shall
be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be
the closing selling price per share of Common Stock on the
date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National
Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
P. GRANT DATE shall mean the date of grant of the option as specified in
the Grant Notice.
Q. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
R. INVOLUNTARY TERMINATION shall mean the termination of Optionee's
Service which occurs by reason of:
(i) Optionee's involuntary dismissal or discharge by
the Corporation for reasons other than for Cause, or
(ii) Optionee's voluntary resignation following (A) A
significant diminution in the nature or scope of the
Optionee's authority, duties or responsibilities in effect
immediately prior to the Change in Control; (B) Any reduction
in the rate of the Optionee's Base Compensation in effect
immediately prior to the Change in Control or a reduction of
25% or more in the value of the Optionee's aggregate
compensation and benefits in effect immediately prior to the
Change in Control; (C) The
A-3
<PAGE> 43
relocation of the Optionee's principal place of employment to
a site more than 25 miles removed from his principal place of
employment immediately prior to the Change in Control; or (D)
An increase of 25% or more in the average amount of time per
month that the Optionee is required to be away from his
principal place of employment, relative to the average amount
of time per month that the Optionee was required to be away
from his principal place of employment immediately prior to
the Change in Control.
S. NON-PLAN OPTIONS shall mean the Option Shares granted pursuant to this
Agreement and any other Option Shares which the Optionee may seek to exercise
that were not granted under the Option/Issuance Plan or any other such plan as
may be adopted by the Corporation.
T. NON-STATUTORY OPTIONS shall mean Option Shares not intended to satisfy
the requirements of Code Section 422.
U. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
V. OPTION/ISSUANCE PLAN shall mean the Corporation's 1995 Stock
Option/Stock Issuance Plan as amended and restated as of August 21, 1998.
W. OPTION SHARES shall mean the number of shares of Common Stock subject
to the stock options granted by the Corporation to the Optionee.
X. OPTIONEE shall refer to Mr. Jeffrey R. Rodek.
Y. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
Z. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
AA. PLAN OPTIONS shall mean Option Shares issued under the Option/Issuance
Plan or under any other such plan as may be adopted by the Corporation.
BB. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations
Order that would substantially comply with the requirements of Code Section
414(p) if the Plan were subject to such section. The Compensation Committee
shall have the sole discretion to determine whether a Domestic Relations Order
is a Qualified Domestic Relations Order.
A-4
<PAGE> 44
CC. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
DD. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.
EE. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
FF. TAXES shall mean the Federal, state and local income and employment tax
liabilities incurred by the Optionee.
A-5
<PAGE> 45
Hyperion Solutions Corporation
ID: 77-027777
HYPERION SOLUTIONS CORPORATION 1344 Crossman Avenue
NOTICE OF GRANT OF STOCK OPTIONS Sunnyvale, CA 94089
OPTION NUMBER: ____________
PLAN: Not Applicable
ID: ____________
Notice is hereby given of the following option grant (the "Option") to purchase
shares of the Common Stock of Hyperion Solutions Corporation (the
"Corporation").
Optionee: Jeffrey R. Rodek
Grant Date: October 11, 1999
Vesting Commencement Date: October 11, 1999
Exercise Price: $19.063 per share
Expiration Date: October 11, 2009
Number of Option Shares: 600,000 Total Option Shares
Exercise Schedule: The Option shall become exercisable with
respect to (i) twenty-five percent (25%) of the Total Option
Shares upon Optionee's completion of one (1) year of Service
measured from the Vesting Commencement Date and (ii) the
balance of the Option Shares in successive equal monthly
installments upon Optionee's completion of each of the next
thirty-six (36) months of Service measured from and after the
first anniversary of the Vesting Commencement Date. In no
event shall the Option become exercisable for any additional
Option Shares after Optionee's cessation of Service.
Exercise Order: In each fiscal year of the Corporation that
the Optionee chooses to exercise this option, he shall
exercise this option for those Option Shares that are then
exercisable in conjunction with the option(s) granted to him
under the Option/Issuance Plan in the order of exercise
specified in Section 4(ii) of the Stock Option Agreement
between Hyperion Solutions Corporation and the Optionee dated
as of October 11, 1999 relating to the issuance of 600,000
shares (the "Agreement").
Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the Agreement. Optionee further
agrees to be bound by the terms of the Agreement attached hereto as Exhibit A.
The Option shall be considered a Non-Statutory Stock Option
that is not intended to satisfy the provisions of Section 422(d) of the Internal
Revenue Code of 1986, as amended.
No Employment or Service Contract. Nothing in this Notice or
in the attached Agreement shall confer upon Optionee 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 Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason, with or without cause.
Definitions. All capitalized terms in this Notice shall have
the meaning assigned to them in this Notice or in the attached Stock Option
Agreement.
HYPERION SOLUTIONS CORPORATION
OPTIONEE
/s/ Jeffrey R. Rodek /s/ Stephen V. Imbler
- ------------------------------ -------------------------
Stephen V. Imbler
Interim President and CEO
<PAGE> 46
SCHEDULE A
Alabama New York
Alaska North Carolina
Arizona North Dakota
Arkansas Ohio
California Oklahoma
Colorado Oregon
Connecticut Pennsylvania
Delaware Rhode Island
Florida South Carolina
Georgia South Dakota
Hawaii Tennessee
Idaho Texas
Illinois Utah
Indiana Vermont
Iowa Virginia
Kansas Washington
Kentucky West Virginia
Louisiana Wisconsin
Maine Wyoming
Maryland Australia
Massachusetts Brazil
Michigan Canada
Minnesota England
Mississippi France
Missouri Germany
Montana Hong Kong
Nebraska Israel
Nevada Japan
New Hampshire Mexico
New Jersey Netherlands
New Mexico Singapore
United Kingdom
<PAGE> 1
Exhibit 10.2
HYPERION SOLUTIONS CORPORATION
RESTRICTED STOCK AWARD AGREEMENT
- RELATING TO 100,000 SHARES -
EFFECTIVE AS OF OCTOBER 11, 1999
RECITALS
A. The Compensation Committee has approved this Restricted Stock Award
Agreement for the purpose of retaining the services of JEFFREY R. RODEK (the
"Employee").
B. Employee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is intended to promote the interests
of the Corporation by providing Employee with the opportunity to acquire a
proprietary interest, or otherwise increase his proprietary interest, in the
Corporation as an incentive for him to remain in the service of the Corporation.
C. All capitalized terms in this Agreement shall have the meanings
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF SHARES. The Corporation hereby grants to Employee, on
the terms and subject to the conditions set forth herein, 100,000 restricted
shares of Common Stock.
2. PAYMENT. In payment of the Restricted Shares, Employee shall
deliver to the Corporation on the date hereof a check for One Hundred Dollars
($100.00), the aggregate par value of the Restricted Shares. Such payment shall
constitute purchase of the Restricted Shares.
3. FORFEITURE AND TRANSFER RESTRICTIONS.
a. Restrictions. In the event that Employee's Service to the
Corporation shall cease for any reason, all Restricted Shares for which
restrictions have not then lapsed pursuant to Section 3(b) or Section 4 (a), (c)
or (d) below shall be forfeited by Employee. This restriction shall be referred
to as the "Forfeiture Restriction". In addition, Employee shall not be permitted
to sell, assign, pledge or otherwise encumber any Restricted Shares until lapse
of the Forfeiture Restriction. This restriction is referred to as the "Transfer
Restriction" and, together with the Forfeiture Restriction, the "Restrictions".
b. Lapse of Restrictions. Except as otherwise provided in Section
4, the Restrictions shall lapse with respect to Six Thousand Two Hundred and
Fifty (6,250) Restricted Shares on the eleventh day each successive third
PAGE 1
<PAGE> 2
month following October 11, 1999, such that the Restrictions shall have lapsed
with respect to all of the Restricted Shares on October 11, 2003 if the Employee
remains in Service at such date.
c. If any Restricted Shares are forfeited, such shares shall be
immediately surrendered to the Corporation for cancellation, and the Employee
shall have no further stockholder rights with respect to those shares. The
Corporation shall repay the Employee $.001 for each Restricted Share forfeited
within 30 days of their forfeiture.
4. ACCELERATION OF LAPSE OF RESTRICTIONS.
a. In the event of a Corporate Transaction, the Restrictions
shall lapse with respect to all of the Restricted Shares immediately prior to
the effective date of the Corporate Transaction. Restrictions shall not lapse,
however, if and to the extent: (i) all obligations with respect to the
Restricted Shares are assumed by the successor corporation such that Service
with the successor corporation will constitute Service hereunder or (ii) the
Restricted Shares are to be replaced with a cash incentive program or
arrangement of the successor corporation which compensates the Employee in an
amount equal to the Fair Market Value of the Restricted Shares which remain
subject to the Restrictions at the time of the consummation of such Corporate
Transaction, which amount shall be payable in installments when, and only to the
extent that, the Restrictions would have lapsed with respect to such Restricted
Shares had they remained outstanding at such times. The determination of
comparability under clause (i) shall be made by the Compensation Committee, and
such determination shall be final, binding and conclusive.
b. Immediately prior to the Corporate Transaction, all Restricted
Shares for which Restrictions have not (i) lapsed pursuant to Section 3(b) or
4(a) or (ii) been assumed pursuant to Section 4(a), shall be forfeited by
Employee.
c. Upon an Involuntary Termination of Employee's Service within
eighteen (18) months following a Corporate Transaction in which the Restricted
Shares have been assumed by the successor corporation pursuant to Section
4(a)(i), the Restrictions shall lapse with respect to all of the Restricted
Shares.
d. The Compensation Committee shall have the discretion,
exercisable at any time while the Restrictions remain applicable to any of the
Restricted Shares, to (i) provide for the automatic lapse of the Restrictions
with respect to all or any part of the Restricted Shares upon the occurrence of
a Change in Control or (ii) condition any such automatic lapsing upon the
subsequent Involuntary Termination of the Employee's Service within a specified
period following the effective date of such Change in Control
e. This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
PAGE 2
<PAGE> 3
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
5. RIGHTS AS A STOCKHOLDER; CASH DIVIDENDS. Employee shall have full
stockholder rights with respect to the Restricted Shares, whether or not the
Restrictions have lapsed with respect to those shares. Accordingly, Employee
shall have the right to vote the Restricted Shares and to receive any regular
cash dividends paid on the Restricted Shares.
6. STOCK DIVIDENDS, ETC. Any new, substituted or additional
securities or other property (including money paid other than as a regular cash
dividend) which Employee may have the right to receive with respect to any
Restricted Shares which remain subject to the Restrictions by reason of any
stock dividend, stock split, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration shall be issued subject to
(i) the same Restrictions applicable to any Restricted Shares which remain
subject to the Restrictions and (ii) the escrow arrangements described in
Section 8 below.
7. WAIVER OF RESTRICTIONS. The Compensation Committee may in its
discretion waive the Restrictions applicable to any Restricted Shares that
would otherwise be forfeited upon the cessation of Employee's Service. Such
waiver shall result in the immediate lapse of the Restrictions with respect to
any or all of the Restricted Shares subject to the Restrictions. Such waiver may
be effected at any time.
8. CERTIFICATE; LEGENDS.
a. Certificates representing the Restricted Shares will bear the
following legend:
"The shares represented by this certificate have been
issued under a Restricted Stock Award Agreement,
dated as of October 11, 1999, by and between Hyperion
Solutions Corporation and Jeffrey R. Rodek (the
"Agreement"). Under the terms of the Agreement, the
shares represented hereby are subject to forfeiture
and may not be sold, assigned, transferred, pledged
or otherwise encumbered without the prior written
consent of Hyperion Solutions Corporation."
The foregoing legend shall be removed upon the request of Employee after all
restrictions on the Restricted Shares represented by a certificate have lapsed.
b. Certificates representing the Restricted Shares will be issued
in Employee's name and held by the Secretary of the Corporation until all
restrictions on the Restricted Shares have lapsed. When restrictions have lapsed
on the Restricted Shares, certificates for such Restricted Shares will be
delivered to Employee
PAGE 3
<PAGE> 4
upon request. Notwithstanding the foregoing, if Employee pledges all or any part
of the Restricted Shares as security for a loan made by the Corporation to
Employee as contemplated by that certain Security and Pledge Agreement, dated as
of the date hereof, between the Corporation and Employee (the "Security
Agreement"), then the Restricted Shares shall be delivered to the pledgeholder
named therein, and shall be delivered to the Corporation or the Employee, as
appropriate, only upon release by the pledgeholder.
9. TAX CONSEQUENCES.
a. Tax Advisor. Employee acknowledges that the tax
consequences associated with the Restricted Shares and this Agreement are
complex and depend upon Employee's particular circumstances and that the
Corporation has urged Employee to consult a tax advisor. By signing below
Employee acknowledges that he has retained his own counsel to provide tax
advice, and neither the Corporation nor any of its employees, representatives or
advisors has given Employee tax advice regarding the Restricted Shares or this
Agreement.
b. Withholding Tax. Employee is responsible for the payment
of any withholding or employment taxes which, in the judgment of the
Corporation, result from the purchase of the Restricted Shares or the lapse of
Forfeiture Restrictions thereon.
c. Restrictions. Upon receipt of restricted stock, a
recipient generally has taxable income in the amount of the excess of the then
fair market value of the stock over any consideration paid for the Stock (the
"spread"). However, since the Restricted Shares are subject to a "substantial
risk of forfeiture," if Employee does not make an election under Section 83(b)
of the Code with respect to such shares within 30 days after the date on which
Employee purchases the Restricted Shares in accordance with Section 1 above (a
"Section 83(b) Election"), Employee will have taxable income upon lapse of the
Forfeiture Restriction, rather than at receipt, in an amount equal to the spread
on the date of lapse. The taxable income constitutes supplemental wages subject
to income and employment tax withholding, and the Corporation will generally
receive a corresponding income tax deduction. Employee has executed and
delivered to the Corporation an Acknowledgment in the form of Exhibit 7(c)
hereto.
10. ADJUSTMENT IN RESTRICTED SHARES. Should any change be made to
the Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to the total number and/or
class of the Restricted Shares.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
herein, the provisions of this Agreement shall inure to the benefit of, and be
PAGE 4
<PAGE> 5
binding upon, the Corporation and its successors and assigns and Employee,
Employee's assigns and the legal representatives, heirs and legatees of
Employee's estate.
12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Employee shall be in writing and addressed to Employee at
the address indicated below Employee's signature line below. All notices shall
be deemed effective upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
13. NO COMMITMENT. Nothing in this Agreement constitutes an
agreement that Employee will be employed or retained by the Corporation for any
term.
14. CONSTRUCTION. This Agreement is made and the Restricted Shares
are granted pursuant to resolutions approved by the Compensation Committee and
are in all respects limited by and subject to the terms of such resolutions.
15. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
PAGE 5
<PAGE> 6
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
HYPERION SOLUTIONS CORPORATION
By: /s/ Stephen Imbler
-------------------------
Name:
-----------------------
Title:
----------------------
/s/ Jeffrey R. Rodek
---------------------------
Jeffrey R. Rodek
Address:
-------------------
-------------------
-------------------
I as the Employee's spouse also accept and agree to be bound by the
terms and conditions of this Agreement.
/s/ Christine Schlund-Rodek
----------------------------
Spouse
PAGE 6
<PAGE> 7
APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Restricted Stock Award Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CAUSE shall mean:
(i) The Employee's failure to perform in a satisfactory
fashion one or more reasonable and lawful duties assigned to the Employee by the
Company under this Agreement, if such failure continues for 15 days or more
after the Company has given the Employee written notice describing such failure
and advising him of the consequences of such failure under this Agreement,
provided that such notice shall be required only with respect to the first
failure;
(ii) The Employee's conviction of, or a plea of "guilty"
or "no contest" to, a felony under the laws of the United States or any state
thereof;
(iii) The Employee's failure or refusal to carry out the
reasonable directives of the Company, if such failure continues for three days
or more after the Company has given the Employee written notice describing such
failure and advising him of the consequences of such failure under this
Agreement, provided that such notice shall be required only with respect to the
first failure;
(iv) 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;
(v) Threats or acts of violence directed at any present,
former or prospective employee, independent contractor, vendor, customer or
business partner of the Company (or any of the Company's affiliates); or
(vi) The commission of any act of fraud, embezzlement or
dishonesty by Employee, any unauthorized use or disclosure by Employee of
confidential information or trade secrets of the Company (or any of the
Company's affiliates), or any other intentional misconduct by Employee affecting
the business or affairs of the Company (or any of the Company's affiliates) in a
material manner.
A- PAGE 7
<PAGE> 8
D. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON STOCK shall mean the Corporation's common stock, par value
$.001 per share.
G. COMPENSATION COMMITTEE shall mean a subcommittee of the Board
composed of outside members of the Board which makes policy determinations
regarding executive compensation.
H. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
I. CORPORATION shall mean Hyperion Solutions Corporation, a Delaware
corporation.
J. EMPLOYEE shall refer to Mr. Jeffrey R. Rodek.
A- PAGE 8
<PAGE> 9
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per share
of Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing selling price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
L. FORFEITURE RESTRICTION shall have the meaning set forth in Section
3(a).
M. INVOLUNTARY TERMINATION shall mean the termination of Employee's
Service which occurs by reason of:
(i) Employee's involuntary dismissal or discharge by the Corporation
for reasons other than for Cause, or
(ii) Employee's voluntary resignation following Optionee's following
(A) A significant diminution in the nature or scope of the Optionee's authority,
duties or responsibilities in effect immediately prior to the Change in Control;
(B) Any reduction in the rate of the Optionee's Base Compensation in effect
immediately prior to the Change in Control or a reduction of 25% or more in the
value of the Optionee's aggregate compensation and benefits in effect
immediately prior to the Change in Control; (C) The relocation of the Optionee's
principal place of employment to a site more than 25 miles removed from his
principal place of employment immediately prior to the Change in Control; or (D)
An increase of 25% or more in the average amount of time per month that the
Optionee is required to be away from his principal place of employment, relative
to the average amount of time per month that the Optionee was required to be
away from his principal place of employment immediately prior to the Change in
Control.
N. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the
A- PAGE 9
<PAGE> 10
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
O. RESTRICTED SHARES shall mean the shares of Common Stock awarded
to Employee hereunder.
P. RESTRICTIONS shall have the meaning set forth in Section 3(a).
Q. SECTION 83(b) ELECTION shall have the meaning set forth in
Section 9(c).
R. SECURITY AGREEMENT shall have the meaning set forth in Section
8(b).
S. SERVICE shall mean the Employee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
T. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
U. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
V. TRANSFER RESTRICTION shall have the meaning set forth in Section
3(a).
A- PAGE 10
<PAGE> 11
EXHIBIT 7(c)
ACKNOWLEDGMENT AND STATEMENT
OF DECISION REGARDING ELECTION
PURSUANT TO SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned (which term includes the undersigned's spouse), a
purchaser of 100,000 shares of Common Stock of Hyperion Solutions Corporation, a
Delaware corporation (the "CORPORATION"), pursuant to the Restricted Stock Award
Agreement dated as of October 11, 1999 (the "AGREEMENT"), hereby states as
follows:
1. The undersigned acknowledges receipt of a copy of the Agreement. The
undersigned has carefully reviewed the Agreement.
2. The undersigned either [check as applicable]:
___ (a) has consulted and has been fully advised by, the undersigned's
own tax advisor, _________________________, whose business address is
__________________________________, regarding the federal, state and local tax
consequences of purchasing shares under the Agreement, and particularly
regarding the advisability of making elections pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended (the "CODE"), and pursuant to the
corresponding provisions, if any, of applicable state laws; or
___ (b) has knowingly chosen not to consult such a tax advisor.
3. The undersigned hereby states that the undersigned has decided
[check as applicable]:
___ (a) to make an election pursuant to Section 83(b) of the Code, and
is submitting to the Corporation, together with the undersigned's executed
Agreement, an executed form headed in part "Election Pursuant to Section 83(b)
of the Internal Revenue Code," which is attached as Exhibit A to this
Acknowledgment; or
___ (b) not to make an election pursuant to Section 83(b) of the Code.
4. Neither the Corporation nor any representative of the Corporation
has made any warranty or representation to the undersigned with respect to the
tax consequences of the undersigned's purchase of shares under the Agreement or
of the making or failure to make an election pursuant to Section 83(b) of the
Code or the corresponding provisions, if any, of applicable state law.
PAGE 11
<PAGE> 12
5. The undersigned is also submitting to the Corporation, together with
the Agreement, an executed original of an election, if any is made, of the
undersigned pursuant to provisions of state law corresponding to Section 83(b)
of the Code, if any, which are applicable to the undersigned's purchase of
shares under the Agreement.
Date: ___________________
______________________________________
Purchaser
Date: ___________________
______________________________________
Purchaser's Spouse, if applicable
PAGE 12
<PAGE> 13
EXHIBIT A
ELECTION PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE TO INCLUDE IN GROSS INCOME
THE EXCESS OVER THE PURCHASE PRICE, IF ANY, OF THE VALUE OF
PROPERTY TRANSFERRED IN CONNECTION WITH SERVICES
The undersigned hereby elects pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, to include in the undersigned's gross income
for the 1999 taxable year the excess (if any) of the fair market value of the
property described below, over the amount the undersigned paid for such
property, and supplies herewith the following information in accordance with the
Treasury regulations promulgated under Section 83(b):
1. The undersigned's name, address and taxpayer identification
(social security) number are:
Name: Jeffrey R. Rodek
Address: 18 Sunpeak
Irvine, CA 92612
Social Security
Number: ___________________________
2. The property with respect to which the election is made consists of
100,000 shares of Common Stock of Hyperion Solutions Corporation, a Delaware
corporation (the "Corporation").
3. The date on which the shares were transferred to the undersigned was
October 11, 1999, and the taxable year to which this election relates is 1999.
4. The shares are subject to the following restrictions: (a) forfeiture
if the undersigned ceases to perform services for the Corporation (or any parent
or subsidiary of the Corporation) in the capacity of an employee, a non-employee
member of the board of directors or a consultant or independent advisor and (b)
transfer restrictions if the undersigned wishes to transfer the shares prior to
the lapse of such forfeiture restriction.
5. The fair market value of the shares at the time of transfer
(determined without regard to any restrictions other than those which by their
terms will never lapse) was $_____ per share.
PAGE 13
<PAGE> 14
6. The amount paid for the shares by the undersigned was $0.001 per
share.
7. A copy of this election has been furnished to the Corporation.
Date: November __, 1999
______________________________________
Jeffrey R. Rodek
PAGE 14
<PAGE> 1
Exhibit 10.3
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, Jeffrey R. Rodek ("Mr. Rodek"), hereby promises to
pay Hyperion Solutions Corporation (the "Holder") the sum of One Million Dollars
($1,000,000.00) plus interest thereon.
SECTION 1. MATURITY. All principal and interest payable under this Note
shall be due on the earlier to occur of (i) the date thirty (30) days following
the termination of Mr. Rodek's service as an employee or director of, or
consultant to, Holder or one of Holder's subsidiaries and (ii) October 11, 2005
(the "Maturity Date"). Upon payment in full of all principal and interest
payable hereunder, this Note shall be surrendered to Mr. Rodek for cancellation.
SECTION 2. INTEREST. Interest on the outstanding principal amount shall
be cumulative, accrue at the rate of 6.02% per annum and be paid in cash.
SECTION 3. DEFAULT. The failure by Mr. Rodek to pay all principal and
interest payable hereunder within ten (10) business days of the Maturity Date
when the same shall have become due and payable shall constitute an event of
default ("Event of Default"):
SECTION 4. ACCELERATION. Upon an Event of Default, all principal and
interest payable hereunder shall become immediately due and payable to Holder.
SECTION 5. ENFORCEMENT COSTS. Mr. Rodek shall pay all expenses,
including attorneys' fees, reasonably incurred by Holder in the preservation,
realization, enforcement or exercise of any of Holder's rights under this Note.
SECTION 6. WAIVER. Presentment, protest, notice of protest, notice of
dishonor, and notice of nonpayment are waived with respect to any proceeds to
which Holder is entitled hereunder, and any rights to direct the application of
payments for security for indebtedness of Mr. Rodek hereunder, and any right to
require proceedings against others or to require exhaustion of security, are
waived.
SECTION 7. NOTICES. Any notice required to be given or delivered to Mr.
Rodek shall be in writing and addressed to Mr. Rodek at the address set forth
below his name on the signature line of this Note or to such superseding address
as given to Holder in writing by Mr. Rodek.
Any notice required to be given or delivered to Holder under the terms
of this Note shall be in writing and addressed to Holder at the following
address:
Hyperion Solutions Corporation
1344 Crossman Avenue
Sunnyvale, California 94089
Attention: Larry J. Braverman, General Counsel
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.
<PAGE> 2
SECTION 8. LAW GOVERNING. The interpretation, performance and
enforcement of this Note shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
IN WITNESS WHEREOF, Jeffrey R. Rodek has executed this Secured
Promissory Note to be effective on this 11th day of October, 1999.
/s/ Jeffrey R. Rodek
-----------------------
Jeffrey R. Rodek
Address:
-----------------------------
-----------------------------
-----------------------------
2
<PAGE> 1
Exhibit 10.4
Personal and Confidential
October 11, 1999
Michael Sternad
Avenue of the Arts
Costa Mesa, CA
Dear Michael:
We are pleased to offer you a full-time position with Hyperion Solutions
Corporation ("Hyperion") as a Chief Financial Officer. You will report to
Stephen Imbler and will work from our Sunnyvale office. Specifics of our offer
include:
1. Your employment will commence on or before November 1, 1999. You will be
compensated on a semi-monthly basis at an annualized rate of $185,000.00 less
tax withholdings and applicable deductions. In addition, you will also be
eligible to participate in our Executive Bonus Plan with a bonus of $75,000.00
of the actual base salary earned by you for the fiscal year. We note that bonus
payments are discretionary and are a function of Hyperion's profitability,
departmental success in meeting specified objectives and your individual
performance. Please consult your orientation package or company guidelines for
details on the Executive Bonus Plan.
1A. As part of your employment, you will be granted, subject to approval by
the Board of Directors, a Stock Option right to purchase up to 120,000 shares of
Hyperion Solutions common stock. The price of these shares will be determined on
your start date (grant date). You will receive a plan description/prospectus
once your options have been approved. The vesting schedule is 25% vesting after
the first year from the grant date and 1/48th per month for the following 36
months, so long as you remain continuously employed by the company. In addition,
any stock option grant or bonus payment, if any, is conditioned upon your
current employment with Hyperion at the time of the grant approval.
2. Effective with your date of hire, you will have the option to enroll for
group medical coverage for yourself and your dependents. Your local Human
Resources department will provide a detailed explanation of the various options
and their associated costs at new hire orientation. Please note that all Company
benefits are subject to change.
3. By signing below, you acknowledge that your employment at Hyperion is for
an unspecified duration, and neither this letter, nor your acceptance thereof,
constitutes a contract of employment. Hyperion is an "at will" employer, which
means that the employment relationship may be terminated at any time by either
Hyperion or by you, with or without notice and with or without cause. Hyperion
may change your title, reporting assignment and duties from time to time in its
sole discretion.
4. Your employment is to be considered exclusive to Hyperion. While you are
employed by Hyperion, you will not perform services for compensation for any
third party.
5. If you have not already done so, you will be required to complete an
Application for Employment form as a condition of your employment with Hyperion.
The Application authorizes us to obtain information on your employment history
and other job qualifications. In the event the company determines that
information on the Application is incorrect, incomplete, misleading or false,
your continued employment with the company may be jeopardized.
<PAGE> 2
PERSONAL AND CONFIDENTIAL
Page 2
6. In consideration of your agreeing to this employment offer with Hyperion
and as a condition of your reporting for work, we ask that you sign the enclosed
Employee Proprietary Information Agreement.
7. The terms and conditions contained in this offer letter supersede any
other representations made to you, whether oral or written, and cannot be
changed without the express written approval of the President of the Company.
8. Under the Immigration Reform and Control Act (IRCA), all employers are
required to verify the identity of all new employees as well as an employee's
right to work in the United States within three business days of the employee's
start date. Your offer of employment is contingent on your ability to provide
the necessary documentation to us in a timely manner to comply with IRCA.
7. You need to complete the following items immediately: W-4, and benefit
election form. This paperwork will ensure you receive your first paycheck
promptly. If you need assistance completing this material please contact our
Human Resources Department. Within the first days of your employment you will
also be asked to provide us with documentation of your eligibility to work in
the United States.
If the terms of this offer are acceptable to you, please indicate below by
signing and returning one copy to us along with the signed Employee Proprietary
Information Agreement and the completed documents described in Paragraph 7. You
will find a return self addressed, stamped envelope enclosed for your
convenience. If the terms of this offer are acceptable to you, please contact
Human Resources at (408) 220-8547 with your verbal acceptance. If we do not hear
from you by 5:00PM-PST on October 18th, 1999, we will assume you are not
interested in this offer and it will automatically expire.
Mike, we look forward to your becoming a part of Hyperion.
Sincerely,
Hyperion Solutions Corporation
By Renae Bresee
Human Resources
ACCEPTED AND AGREED TO
THIS 11TH DAY OF OCTOBER 1999
/s/ Michael Sternad
- ---------------------------
Michael Sternad
10/11/99
Please indicate actual start date: ____________________
Social Security Number: ________________________
<PAGE> 1
Exhibit 10.5
October 28, 1999
James A. Perakis
59 Edgewater Drive
Wilton, CT 06897
Re: AMENDED & RESTATED AGREEMENT BETWEEN JAMES A. PERAKIS AND HYPERION
SOLUTIONS CORPORATION ("THE COMPANY") DATED AS OF JANUARY 1, 1999 (THE
"EMPLOYMENT AGREEMENT")
Dear Jim:
This letter reflects our agreement as of September 30, 1999 as to certain
changes to your Employment Agreement.
1. The term of your employment under Section 2 of the Employment Agreement is
extended until October 31, 1999, immediately after which date the
Employment Agreement shall expire and your employment shall terminate. Upon
the termination of your employment, you will have no right to severance
pay, salary, bonus pay, expense reimbursement, or benefit continuation
except as provided in paragraphs 2 and 3 below.
2. Promptly after the execution of this letter, the Company will pay you a
bonus of $ 60,417 with respect to your service to the Company during fiscal
year 1999 and that portion of fiscal 2000 ending on October 31, 1999 in
lieu of the payment described in Section 3(b) of the Employment Agreement.
3. Following the termination of your employment as described in paragraph 1
above, the Company will select and pay the premium for basic major medical
and dental insurance for you, your spouse and your children (in each case
until such child reaches the age of twenty-one (21)), which insurance will
be at least equivalent to the Company's current medical and dental
insurance plans and in no event be less favorable than the more favorable
of either medical and dental insurance, respectively, provided to the
Company's senior executives generally or its employees generally. In the
event that the terms of the insurance selected by the Company provide, at
no additional cost, for coverage of children while students beyond age
twenty one (21) but not beyond age twenty five (25), these benefits will be
made available to you for your children. These benefits shall continue
until you reach age sixty-five (65), or should you die earlier, until you
otherwise would have reached the age of sixty-five (65).
4. As provided in the Nonqualified Stock Option Agreement between you and
Hyperion Software Corporation dated September 19, 1996 (the
<PAGE> 2
"Option Agreement"), while you continue to maintain a Business Relationship
with the Company, you may continue to exercise any vested and unexercised
options granted under the Option Agreement up to and including September
19, 2006. Service as member of the Company's Board of Directors constitutes
a "Business Relationship" for this purpose.
5. You hereby resign, effective October 31, 1999, from all positions as an
officer or director of any direct or indirect subsidiaries of the Company.
You are continuing as a member of the Board of Directors of the Company.
6. You acknowledge that your obligations under Section 7 (restrictions on
employee), Section 8 (covenant not compete), Section 9 (proprietary
information), Section 10 (injunctive relief) and Section 16 (choice of law)
will survive the expiration of the Employment Agreement. The Company
likewise acknowledges that the provisions of Section 5 (duties and extent
of services) of the Employment Agreement (to the extent they address your
ability to serve on the board of directors of other corporations) and the
provisions of Section 14 (indemnification; D&O coverage) of the Employment
Agreement shall survive for so long as you remain a member of the Company's
Board of Directors.
7. With respect to your vested and exercisable Company stock options, the
Company will, upon your request, seek all approval necessary to permit the
option exercise price for such rights (and any applicable withholding tax)
to be paid by delivery of shares of Company common stock having an
aggregate fair market value equal as of the date of exercise to such option
exercise price (and any applicable withholding tax), in accordance with the
terms of the plan(s) and/or agreement(s) governing such rights.
Kindly acknowledge your agreement to the terms of this letter by countersigning
in the space provided below.
Signed,
HYPERION SOLUTIONS CORPORATION
By: /s/ Jeffrey R. Rodek
----------------------------------
Jeffrey R. Rodek, Chairman & CEO
Agreed and accepted.
/s/ James A. Perakis
- -------------------------------------
James A. Perakis
<PAGE> 1
Exhibit 10.6
HYPERION SOLUTIONS CORPORATION
1999 STOCK OPTION PLAN
ARTICLE I
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1999 Stock Option Plan is intended to promote the interests of
Hyperion Solutions Corporation (the "Corporation") by providing eligible persons
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
A. Administration of the Plan may, at the Board's discretion, be
vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer those programs with respect to all such persons.
B. Members of the Primary Committee shall serve for such period of
time as the Board may determine and may be removed by the Board at any time. The
Board may also at any time terminate the functions of any Secondary Committee
and reassume all powers and authority previously delegated to such committee or
transfer such powers and authority to the Primary Committee.
C. The Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue such
interpretations of, the provisions of such programs and any outstanding options
thereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions under the Plan
shall be final and binding on all parties who have an interest in the Plan or
any option issued thereunder.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants under the Plan.
<PAGE> 2
III. ELIGIBILITY
A. Employees and consultants to the Corporation shall be eligible for
the grant of options under the Plan, except that members of the Board and
individuals who are considered officers of the Corporation under the rules of
the National Association of Securities Dealers shall not be eligible for the
grant of options under the Plan.
B. The Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to the
provisions of the Plan) to determine, with respect to the option grants under
the Plan, which eligible persons are to receive option grants, the time or times
when such option grants are to be made, the number of shares to be covered by
each such grant, the time or times at which each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock which may
be issued under the Plan shall be determined from time to time by the Primary
Committee.
B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are canceled in accordance with the cancellation-regrant provisions of Article
II. All shares issued under the Plan, whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis the number of shares of
Common Stock available for subsequent issuance under the Plan. In addition,
should the exercise price of an option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes incurred
in connection with the exercise of an option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised, and not by the net
number of shares of Common Stock issued to the holder of such option.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive.
2
<PAGE> 3
ARTICLE II
OPTIONS
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; PROVIDED, however, that each such document
shall comply with the terms specified below.
A. Exercise Price.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than eighty-five percent (85%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article III
and the documents evidencing the option, be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date, or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable written instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale transaction.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
B. Exercise and Term of Options. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
3
<PAGE> 4
C. Effect of Termination of Service.
1. The following provisions shall govern the exercise of any
options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the
Optionee's cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan Administrator and
set forth in the documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by the personal
representative of the Optionee's estate or by the person or persons to whom the
option is transferred pursuant to the Optionee's will or beneficiary designation
or in accordance with the laws of descent and distribution.
(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable on the date of the
Optionee's cessation of Service. Upon the expiration of the applicable exercise
period or (if earlier) upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for which the option
has not been exercised. However, the option shall, immediately upon the
Optionee's cessation of Service, terminate and cease to be outstanding to the
extent it is not exercisable for vested shares on the date of such cessation of
Service.
(iv) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall terminate
immediately and cease to be outstanding.
(v) In the event of an Involuntary Termination
following a Corporate Transaction, the provisions of Section III of this Article
II shall govern the period for which the outstanding options are to remain
exercisable following the Optionee's cessation of Service and shall supersede
any provisions to the contrary in this Section I.
2. The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of Service from the
period otherwise in effect for that option to such greater period of time as the
Plan Administrator shall deem appropriate, but in no event beyond the expiration
of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the number of
vested shares of Common Stock for which such option is exercisable at the time
of the Optionee's cessation of Service but
4
<PAGE> 5
also with respect to one or more additional installments in which the Optionee
would have vested under the option had the Optionee continued in Service.
D. Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. Repurchase Rights. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. Limited Transferability of Options. During the lifetime of the
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will, beneficiary designation or the
laws of descent and distribution following the Optionee's death. However, a
Non-Statutory Option may be assigned in whole or in part during the Optionee's
lifetime in accordance with the terms of a Qualified Domestic Relations Order.
The assigned portion may only be exercised by the person or persons who acquire
a proprietary interest in the option pursuant to such Qualified Domestic
Relations Order. The terms applicable to the assigned portion shall be the same
as those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable for all of the shares of Common Stock at the time subject to
such option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall NOT so accelerate
if and to the extent: (i) such option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation (or parent
thereof) or to be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation (or parent thereof), (ii) such option
is to be replaced with a cash incentive program of the successor corporation
which preserves the spread existing on the unvested option shares at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the acceleration of
such option is subject to other limitations imposed by the Plan Administrator at
the time of the option grant. The determination of option comparability under
clause (i) above shall be made by the Plan Administrator, and its determination
shall be final, binding and conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in
5
<PAGE> 6
the event of any Corporate Transaction, except to the extent: (i) those
repurchase rights are to be assigned to the successor corporation (or parent
thereof) in connection with such Corporate Transaction or (ii) such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator at
the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, PROVIDED the
aggregate exercise price payable for such securities shall remain the same.
E. Any options which are assumed or replaced in the Corporate
Transaction and do not otherwise accelerate at that time shall automatically
accelerate (and any of the Corporation's outstanding repurchase rights which do
not otherwise terminate at the time of the Corporate Transaction shall
automatically terminate and the shares of Common Stock subject to those
terminated rights shall immediately vest in full) in the event the Optionee's
Service should subsequently terminate by reason of an Involuntary Termination
within eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for
fully-vested shares until the EARLIER of (i) the expiration of the option term
or (ii) the expiration of the one (1)-year period measured from the effective
date of the Involuntary Termination.
F. The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to (i) provide for the automatic acceleration of one or more
outstanding options (and the automatic termination of one or more outstanding
repurchase rights with the immediate vesting of the shares of Common Stock
subject to those rights) upon the occurrence of a Change in Control or (ii)
condition any such option acceleration (and the termination of any outstanding
repurchase rights) upon the subsequent Involuntary Termination of the Optionee's
Service within a specified period following the effective date of such Change in
Control. Any options accelerated in connection with a Change in Control shall
remain fully exercisable until the expiration or sooner termination of the
option term.
G. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
6
<PAGE> 7
III. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution new options covering the same or different number of shares of
Common Stock but with an exercise price per share based on the Fair Market Value
per share of Common Stock on the new option grant date.
IV. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to grant
to selected Optionees tandem stock appreciation rights and/or limited stock
appreciation rights.
B. The following terms shall govern the grant and exercise of tandem
stock appreciation rights:
(i) One or more Optionees may be granted the right, exercisable
upon such terms as the Plan Administrator may establish, to elect between the
exercise of the underlying option for shares of Common Stock and the surrender
of that option in exchange for a distribution from the Corporation in an amount
equal to the excess of (a) the Fair Market Value (on the option surrender date)
of the number of shares in which the Optionee is at the time vested under the
surrendered option (or surrendered portion thereof) over (b) the aggregate
exercise price payable for such shares.
(ii) No such option surrender shall be effective unless it is
approved by the Plan Administrator. If the surrender is so approved, then the
distribution to which the Optionee shall be entitled may be made in shares of
Common Stock valued at Fair Market Value on the option surrender date, in cash,
or partly in shares and partly in cash, as the Plan Administrator shall in its
sole discretion deem appropriate.
(iii) If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the LATER of
(a) five (5) business days after the receipt of the rejection notice or (b) the
last day on which the option is otherwise exercisable in accordance with the
terms of the documents evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of limited
stock appreciation rights:
(i) Upon the occurrence of a Hostile Take-Over, each such
individual holding one or more options with such a limited stock appreciation
right in effect for at least six (6) months shall have the unconditional right
(exercisable for a thirty (30)-day period following such Hostile Take-Over) to
surrender each such option to the Corporation, to the extent the option is at
the time exercisable for vested shares of Common Stock. In return for the
7
<PAGE> 8
surrendered option, the Optionee shall receive a cash distribution from the
Corporation in an amount equal to the excess of (A) the Take-Over Price of the
shares of Common Stock which are at the time vested under each surrendered
option (or surrendered portion thereof) over (B) the aggregate exercise price
payable for such shares. Such cash distribution shall be paid within five (5)
days following the option surrender date.
(ii) Neither the approval of the Plan Administrator nor the
consent of the Board shall be required in connection with such option surrender
and cash distribution.
(iii) The balance of the option (if any) shall continue in full
force and effect in accordance with the documents evidencing such option.
ARTICLE III
MISCELLANEOUS
I. FINANCING
A. The Plan Administrator may permit any Optionee to pay the option
exercise price under the Plan by delivering a promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. Promissory notes may be authorized with or without
security or collateral. In all events, the maximum credit available to the
Optionee may not exceed the sum of (i) the aggregate option exercise price or
purchase price payable for the purchased shares plus (ii) any Federal, state and
local income and employment tax liability incurred by the Optionee in connection
with the option exercise or share purchase.
B. The Plan Administrator may, in its discretion, determine that one
or more such promissory notes shall be subject to forgiveness by the Corporation
in whole or in part upon such terms as the Plan Administrator may deem
appropriate.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock upon
the exercise of options or stock appreciation rights under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
holders of Non-Statutory Options or unvested shares of Common Stock under the
Plan with the right to use shares of Common Stock in satisfaction of all or part
of the Taxes incurred by such holders in connection with the exercise of their
options or the vesting of their shares. Such right may be provided to any such
holder in either or both of the following formats:
8
<PAGE> 9
(i) Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
(ii) Stock Delivery: The election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes (not to
exceed one hundred percent (100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective on the Plan Effective Date and
options may be granted under the Plan from and after the Plan Effective Date.
B. The Plan shall terminate upon the EARLIEST of (i) September 15,
2009, (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of the options or (iii) the
termination of all outstanding options in connection with a Corporate
Transaction. Upon such Plan termination, all options outstanding on such date
shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such options.
IV. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect the rights and obligations with respect to
options or stock appreciation rights at the time outstanding under the Plan
unless the Optionee consents to such amendment or modification.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option or stock
appreciation right under the Plan and the issuance of any shares of Common Stock
upon the exercise of any option or stock appreciation right shall be subject to
the Corporation's procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the shares of Common Stock issued
pursuant to it.
9
<PAGE> 10
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee 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 Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
10
<PAGE> 11
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean Hyperion Solutions Corporation (formerly
known as Arbor Software Corporation), a Delaware corporation.
G. PLAN shall mean the Plan in effect under the Plan.
A-1
<PAGE> 12
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.
I. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing price per share
of Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers on the Nasdaq National Market or any
successor system. If there is no closing price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange determined
by the Plan Administrator to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling price on
the last preceding date for which such quotation exists.
L. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the following transaction:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept, AND
(ii) more than fifty percent (50%) of the securities so acquired
are accepted from persons other than Section 16 Insiders.
M. INVOLUNTARY TERMINATION shall mean the termination of the Service
of any individual which occurs by reason of:
A-2
<PAGE> 13
(i) such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a
change in his or her position with the Corporation which materially reduces his
or her level of responsibility, (B) a reduction in his or her level of
compensation (including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than fifteen
percent (15%) or (C) a relocation of such individual's place of employment by
more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's consent.
N. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential information or trade secrets of the Corporation
(or any Parent or Subsidiary), or any other intentional misconduct by such
person adversely affecting the business or affairs of the Corporation (or any
Parent or Subsidiary) in a material manner. The foregoing definition shall not
be deemed to be inclusive of all the acts or omissions which the Corporation (or
any Parent or Subsidiary) may consider as grounds for the dismissal or discharge
of any Optionee or other person in the Service of the Corporation (or any Parent
or Subsidiary).
O. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
P. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
Q. OPTIONEE shall mean any person to whom an option is granted under
the Plan.
R. PARENT shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or more.
T. PLAN shall mean the Corporation's 1999 Stock Option Plan, as set
forth in this document.
U. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Secondary Committee or the Board, which is authorized to
administer the Plan, to the extent such entity is carrying out its
administrative functions under those programs with respect to the persons under
its jurisdiction.
A-3
<PAGE> 14
V. PLAN EFFECTIVE DATE shall mean September 15, 1999.
W. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the Plan.
X. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic
Relations Order that would substantially comply with the requirements of Code
Section 414(p) if the Plan were subject to such section. The Plan Administrator
shall have the sole discretion to determine whether a Domestic Relations Order
is a Qualified Domestic Relations Order.
Y. SECONDARY COMMITTEE shall mean a committee of one (1) or more
Board members appointed by the Board to administer the Plan.
Z. SERVICE shall mean the provision of services to the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant.
AA. STOCK EXCHANGE shall mean either the American Stock Exchange or
the New York Stock Exchange.
BB. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
CC. TAKE-OVER PRICE shall mean the GREATER of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
DD. TAXES shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options or
unvested shares of Common Stock in connection with the exercise of those options
or the vesting of those shares.
A-4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HYPERION SOLUTIONS CORPORATION FOR THE
QUARTER ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 245,523
<SECURITIES> 38,097
<RECEIVABLES> 125,997
<ALLOWANCES> 12,250
<INVENTORY> 0
<CURRENT-ASSETS> 413,833
<PP&E> 146,091
<DEPRECIATION> 77,356
<TOTAL-ASSETS> 520,515
<CURRENT-LIABILITIES> 158,331
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 262,153
<TOTAL-LIABILITY-AND-EQUITY> 520,515
<SALES> 115,793
<TOTAL-REVENUES> 115,793
<CGS> 34,264
<TOTAL-COSTS> 106,446
<OTHER-EXPENSES> 72,182
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,260
<INCOME-PRETAX> 11,273
<INCOME-TAX> 4,200
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,073
<EPS-BASIC> .23
<EPS-DILUTED> .22
</TABLE>
