EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into and effective
as of the 23rd day of August, 1999, (the "Effective Date") by and between Fair,
Isaac and Company, Inc., a Delaware Corporation, having its principal office at
120 North Redwood Drive, San Rafael, California 94903 (the "Company") and Thomas
G. Grudnowski ("Employee").
RECITALS
1. The Company provides customer and operational data management and
modeling, information analysis, strategy design and software to a
variety of industries, worldwide.
2. The Company desires to employ Employee and Employee desires to become
employed by the Company, pursuant to the terms and conditions of this
Agreement.
Section 1.0 EMPLOYMENT, DUTIES AND TERM
1.1 Employment. Upon the terms and conditions set forth in this Agreement, the
Company hereby employs Employee and Employee accepts such employment as Chief
Executive Officer of the Company.
1.2 Election to Board of Directors. Upon the Effective Date of this Agreement,
the Company's Board of Directors shall elect Employee to fill a position as a
member of the Company's Board of Directors as of December 2, 1999. Thereafter,
it is understood and agreed by the Company and Employee that the Board of
Directors of the Company shall thereafter, so long as Employee is the Chief
Executive Office of the Company, nominate the Employee for election to a
position on the Board of Directors of the Company.
1.3 Duties. During the term of this Agreement, and excluding any periods of
vacation, sick leave, disability leave, or other leave to which Employee is
entitled, the Employee shall have reporting responsibilities to the Board of
Directors of the Company and shall have such duties as are assigned by the Board
of Directors of the Company and agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to
such extent necessary, to discharge the responsibilities assigned to the
Employee hereunder as Chief Executive Officer of the Company.
1.4 Employment Relationship. Company and Employee agree that they have an "at
will" employment relationship, which means that either Party has the right to
terminate the employment relationship at any time and for any reason subject to
Section 1.6 and Section 3.0 of this Agreement.
1.5 Commencement of Employment. Employee shall make himself available to the
Company for the purposes of familiarization and orientation commencing no later
than October 8, 1999, and the term of employment shall commence on December 2,
1999, with compensation
EXHIBIT 10.42
and benefits payable to Employee as set forth in this Agreement due and owing
effective December 2, 1999, and thereafter.
1.6 Term of Agreement. This Agreement shall remain in force from the Effective
Date through December 1, 2003.
Section 2.0 COMPENSATION, BENEFITS AND EXPENSES
2.1 Compensation For December 2, 1999 to September 30, 2000. It is understood
and agreed by the Company and Employee that for the period December 2, 1999 to,
and including, September 30, 2000, ("First Year Employment"), that the Company
shall pay Employee a first year employment salary ("First Year Employment
Salary") of Six Hundred Sixty-six Thousand Six Hundred Sixty-six Dollars
($666,666.00), i.e. at the rate of Eight Hundred Thousand Dollars ($800,000.00)
per annum, which shall be payable in accordance with the Company's regular
payroll practices; but in any event, the Company shall pay the First Year
Employment Salary in at least ten (10) equal monthly installments.
2.2 One Time First Year Bonus. Company agrees to pay to Employee, in addition to
the compensation set forth at Section 2.1, a one time first year employment
bonus ("First Year Employment Bonus") in the amount of One Hundred Thirty Three
Thousand Three Hundred Thirty Three Dollars ($133,333.00) payable in full to
Employee on December 2, 1999.
2.3 Base Salary-October 1, 2000. Subject to Section 3.0 of this Agreement,
commencing October 1, 2000 and thereafter during the term of Employee's
employment under this Agreement and for as long thereafter as required pursuant
to Section 3.0 of this Agreement, the Company shall pay Employee a base salary
("Base Salary") at an annual rate of Four Hundred Thousand Dollars ($400,000.00)
which Base Salary shall be paid in accordance with the Company's regular payroll
practices, but in any event Company shall pay to Employee, Employee's Base
Salary in at least twelve (12) equal monthly installments. If Employee's Base
Salary is increased from time to time during the term of Employee's employment
under this Agreement, the increased amount shall become the Base Salary for the
remainder of the term of the Employee's employment under this Agreement, and for
as long thereafter as required pursuant to Section 3.0 subject to any subsequent
increases.
2.4 Incentive Awards. Commencing on October 1, 2000, and thereafter during the
term of Employee's employment under this Agreement, in addition to the Base
Salary payable pursuant to Section 2.1, Employee shall be eligible to receive an
annual bonus ("Incentive Award") with a target amount of Four Hundred Thousand
Dollars ($400,000.00) to be paid if Employee's achievements are "at plan." The
actual amount of such Incentive Award for each fiscal year may range from $0 to
$800,000, based on the achievement of certain strategic, business and financial
objectives that the Employee and the Company's Board of Directors will mutually
determine in good faith not later than ninety (90) days after the beginning of
each fiscal year of the Company.
Such Incentive Award shall be due and payable to Employee, in full, no later
than November 15th of each year of the term of Employee's employment and so long
as Employee is eligible for the Incentive Award and subject to Section 3.0 of
this Agreement.
2.5 Other Benefits. Health, Disability, and Group Term Life Insurance equal to
two (2) times Employee's annual Base Salary, up to a maximum coverage of Five
Hundred Thousand Dollars ($500,000.00), shall be provided by the Company to the
Employee and as provided generally to other employees of the Company, and
Employee shall be entitled to purchase participation in any other employee
benefit plan which exists as of December 2, 1999, or which may be established in
the future by the Company for its employees. In addition to the foregoing,
Employee shall be entitled to and the Company shall provide to Employee
Director's and Officer's ("D and O") indemnification insurance.
2.6 Business Expenses. The Company shall reimburse the Employee for any and all
ordinary, necessary and reasonable business expenses that Employee incurs in
connection with the performance of Employee's duties under this Agreement,
including entertainment, telephone, travel and miscellaneous expenses, provided
that Employee provides the Company with documentation for such expenses in a
form acceptable to the Company.
2.7 Vacation. For each fiscal year during the term of the Employee's employment
under this Agreement, Employee shall be entitled to four (4) weeks of paid
vacation.
2.8 Stock Options and Restricted Stock.
2.8.1 Grant of Options. The Company shall grant to Employee options
("Options") to acquire Four Hundred Twenty Thousand (420,000)
shares of the Company's Common Stock pursuant to the Stock
Option Agreement to be entered into between Employee and
Company simultaneously with the execution of this Agreement.
2.8.2 Vesting and Term of Options. When Employee completes one (1)
continuous year of employment with the Company after the date
of which the Options are granted, Employee may exercise the
Option for One Hundred Five Thousand (105,000) shares of the
Company's Common Stock. Thereafter, Options for Eight Thousand
Seven Hundred Fifty (8,750) shares of the Company's Common
Stock shall vest on the last day of each calendar month during
the term for which Employee is employed with the Company. (All
vesting dates hereinafter collectively "Vesting Date"). All of
the Options herein are subject to Section 3.0. All such
options shall expire ten (10) years after the Effective Date
of this Agreement (the "Expiration Date").
2.8.3 Exercise Price. The Exercise Price ("Exercise Price") for all
Options shall be equal to the closing price of the Company's
Common Stock as quoted by the New York Stock Exchange on the
Effective Date of this Agreement.
2.8.4 Restricted Stock. The Company hereby grants to employee Ten
Thousand (10,000) shares of restricted stock (the "Restricted
Stock") which shall vest on January 1, 2000, provided Employee
is employed by the Company on such date.
By law, the Employee must pay the par value of the stock ($.01
per share) in order to receive such Restricted Stock.
2.8.5 Vesting: Change of Control and Termination. The foregoing
Vesting Dates notwithstanding Employee's Restricted Stock and
Options shall vest and be fully exercisable on the following
dates:
a. Termination "Without Cause." In the event of
termination by the Company of Employee's employment
prior to the termination of this Agreement "without
cause" (other than by death or disability), those
shares of Restricted Stock and Options vesting within
twelve (12) months of the date of such termination
shall immediately vest, such Options shall become
exercisable in full, and Employee shall be required
to exercise the Options within ninety (90) days after
the effective date of the termination.
b. Termination Due to Disability or Death. In the event
of Employee's termination due to death or disability
while an employee or director of the Company, all of
Employee's Restricted Stock and Options shall
immediately vest, and such Options shall become
exercisable in full, and the Options shall be
exercised within twelve (12) months after the event
of death or disability.
c. Change in Control. In the event the Company is
subject to a "Change in Control" (as defined in
Section 3.3 below) during the term of this Agreement
and while Employee is an employee or director of the
Company, Employee's entire Restricted Stock and
Options shall immediately vest, and such Options
shall become fully exercisable up to the Expiration
Date of the Options.
Section 3.0 PAYMENTS UPON TERMINATION
3.1 Severance. If the Company terminates Employee's "at will" employment
"without cause," Employee shall be paid (i) a sum equal to two (2) times
Employee's then Base Salary or if termination occurs during the Employee's first
year of employment, Employee shall be paid the sum of One Million Six Hundred
Thousand Dollars ($1,600,000.00), either sum payable in one lump sum no later
than ninety (90) days after termination; (ii) Employee's accrued but unpaid
time-off (including but not limited to vacation for the year in which such
termination occurs, prorated to the date of such termination; (iii) any unpaid
business expense reimbursements; (iv) a sum equal to two (2) times Employee's
Incentive Award granted by the Company for the period immediately preceding the
date of termination, (v) Employee's other accrued benefits, if any, under any of
the Company's other employee benefit plans subject to the terms and conditions
of those plans, and (vi) Employee shall be entitled to the Restricted Stock and
to exercise the Options at the times and pursuant to Section 2.8.5(a).
3.2 With/Without Cause. For the purposes of this Agreement, "without cause"
shall be any reason other than "cause" and "cause" for the purposes of this
Agreement shall mean: (i) an act
or acts of personal dishonesty taken by Employee and intended to result in
substantial personal enrichment of Employee at the expense of the Company; (ii)
Employee's material breach of any of Employee's obligations under this Agreement
or Employee's repeated failure or refusal to perform or observe Employee's
duties, responsibilities and obligations as an Employee of the Company for
reasons other than disability or incapacity; (iii) the existence of any Court
Order or settlement agreement prohibiting Employee's continued employment with
the Company; (iv) if Employee has signed and/or entered into a written or oral
non-competition agreement, confidentiality agreement, proprietorial information
agreement, trade secret agreement or any other agreement which would prevent
Employee from working for the Company and/or from performing Employee's duties
at the Company; or (v) the willful engaging by Employee in illegal conduct that
is materially and demonstrably injurious to the Company. For the purposes of
this Section 3.2(v), no act or failure to act on Employee's part shall be
considered "dishonest," "willful" or "deliberate" unless done or omitted to be
done by Employee in bad faith and without reasonable belief that Employee's
action or omission was in, or not opposed, to the best interests of the Company.
Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board of Directors of the Company or based upon the advice
of counsel for the Company shall be conclusively presumed to be done, or omitted
to be done, by Employee in good faith and in the best interests of the Company.
3.3 Change of Control. For purposes of this Agreement, a "Change of Control"
shall be deemed to occur upon the occurrence of both (A): (i) the sale, lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any person, entity or
group of persons acting in concert; (ii) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
becoming the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of
the total voting power represented by the Company's then outstanding voting
securities; or (iii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; and (B): (i)
a material adverse change in the Employee's position with the Company which
materially reduces his responsibility, without "cause" and without his written
consent; (ii) a material reduction in the Employee's compensation without his
written consent; or (iii) a relocation of Employee's place of employment outside
of the seven (7) San Francisco Bay Area counties, without his written consent.
Section 4.0 CONFIDENTIAL INFORMATION
4.1 Confidential Information Obtained During Employment. As an employee of the
Company, Employee will have access to certain confidential information of the
Company and its clients; and, Employee may, during the course of his employment,
develop certain information or inventions that will be the property of the
Company. In order to protect the interest of the Company, Employee shall,
contemporaneously with the execution of this Agreement, execute the Company's
Standard Employee confidentiality and Inventions Agreement.
4.2 Information Obtained from Prior Employment. In addition to the foregoing
Section 4.1, Employee shall not provide to the company nor use confidential or
proprietary information of any former employer or clients in violation of any
obligation Employee may have to such former employer or clients.
Section 5.0 RELOCATION BENEFITS
In addition to all other compensation specified herein, the Company
agrees that upon the execution of this Agreement and thereafter it will
reimburse the Employee for all reasonable costs of relocating Employee's family
and household to the San Francisco, California, Bay Area from Deephaven,
Minnesota. The relocation benefits shall include the costs of moving household
goods and personal and recreational vehicles. It shall also include travel
expenses, to include food and lodging, for up to five (5) round trips by
Employee and Employee's spouse to San Francisco, California, Bay Area from
Minnesota prior to actual relocation; and real estate commissions and other
out-of-pocket costs of selling Employee's current residence, together with
temporary living expenses up to six (6) months in the event Employee reports for
employment with the Company prior to relocation of employee's family and
household.
Section 6.0 GENERAL PROVISIONS
6.1 Disputes. In the event of any dispute, controversy, or claim for damages
arising under or in connection with this Agreement, including, but not limited
to, claims for wages or compensation due; claims for breach of any contract or
covenant (expressed or implied); tort claims; claims for discrimination; claims
for benefits (except where an employee benefit or profit sharing plan specifies
that its claims procedures shall culminate in an arbitration procedure) and
claims for violation of any Federal, State or other governmental law, statute,
regulation, or ordinance, except claims for workers' compensation or
unemployment compensation benefits, Employee and Company mutually agree to in
good faith consider the use of forms of alternative dispute resolution,
including, but not limited to, arbitration and/or mediation.
6.2 Remedies. Any remedies which the Parties hereto may have pursuant to this
Agreement or by law shall be cumulative. The Parties hereto agree that if a
Party fails to comply with the terms and conditions hereof, the harm to the
other Party may not be fully compensable in money damages, and accordingly, the
Parties hereby agree that either Party may seek specific performance of any and
all provisions hereafter to the full extent lawfully warranted or the enjoining
of the breaching Party from continuing to commit any breach of the terms and
conditions contained herein.
6.3 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of any successor of the Company ("Successor") and any such successor
shall absolutely and unconditionally assume all of the Company's obligations
hereunder. On Employee's written request, the Company will seek to have any
Successor, by agreement in form and substance satisfactory to Employee, assent
to fulfillment by the such Successor of its obligations under this Agreement.
6.4 No Offsets. In no event shall any amount payable to Employee pursuant to
this Agreement be reduced for purposes of offsetting either directly or
indirectly any indebtedness or liability of Employee to the Company.
6.5 Severability. To the extent a provision of this Agreement shall be invalid
or unenforceable, it shall be considered deleted from this Agreement and the
remainder of this Agreement shall be unaffected and shall continue in full force
and effect. Notwithstanding the foregoing, in the event that a provision of this
Agreement is unenforceable, because it is overbroad, then such provision shall
be limited to the extent necessary to make it enforceable under applicable law
and enforced as so limited. Employee acknowledges the uncertainty of the law in
this respect and expressly stipulates that this Agreement be given the
construction which renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law.
6.6 Governing Law. The validity, interpretation, construction, performance,
enforcement and remedies of or relating to this Agreement, and the rights and
obligations of the Parties hereunder shall be governed by the substantive laws
of the State of California (without regard to the conflict-of-laws rules or
statutes of any jurisdiction), and any and every legal proceeding arising out of
or in connection with this Agreement shall be brought in the appropriate courts
of the State of California if the parties are unable to agree to alternative
dispute resolution as set forth at Section 6.1. Each of the Parties hereby
consents to the exclusive jurisdiction of said courts for this purpose.
6.7 Waivers. No failure on the part of either Party to exercise, and no delay in
exercising a right or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of the right of any remedy
granted hereby or by any related document or by law.
6.8 Modification. This Agreement may not be modified or amended except by
written instruments signed by the Parties hereto.
6.9 Entire Agreement This Agreement constitutes the entire Agreement and
understanding between the Parties hereto with respect to all the matters herein
referenced and agreed upon.
6.10 Survival. The Parties expressly acknowledge and agree that the provisions
of this Agreement which by their expressed or implied terms extend beyond the
termination of Employee's employment hereunder, including, but without
limitation, the obligations incurred under Sections 2.0, 3.0 and 4.0, shall
continue in full force and effect notwithstanding the Employee's termination of
employment hereunder or the termination of this Agreement respectively.
6.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same Agreement.
IN WITNESS WHEREOF the Company has caused this Agreement to be executed
by its duly authorized Officer and Employee has executed this Agreement as of
the day and year first above written:
FAIR, ISAAC AND COMPANY, INC.
BY: __________________________________
ITS: ______________________________
EMPLOYEE
______________________________________
Thomas G. Grudnowski