-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M4wlZUV+jnmB7IpYHTeAlMGcv2MY+iEv3WGz8avmSlmsrpPbXa/7zKCTMsuotztw CHK7H57H1LpxU7STo+jYdQ== 0000950129-04-008358.txt : 20041102 0000950129-04-008358.hdr.sgml : 20041102 20041102165313 ACCESSION NUMBER: 0000950129-04-008358 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20041101 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041102 DATE AS OF CHANGE: 20041102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMC SOFTWARE INC CENTRAL INDEX KEY: 0000835729 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 742126120 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16393 FILM NUMBER: 041113913 BUSINESS ADDRESS: STREET 1: 2101 CITYWEST BLVD CITY: HOUSTON STATE: TX ZIP: 77042-2827 BUSINESS PHONE: 7139188800 MAIL ADDRESS: STREET 1: 2101 CITYWEST BLVD CITY: HOUSTON STATE: TX ZIP: 77042-2827 8-K 1 h19527e8vk.txt BMC SOFTWARE, INC. - NOVEMBER 1, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 1, 2004: BMC SOFTWARE, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 001-16393 74-2126120 (State of Incorporation) (Commission File Number) (I.R.S. Employer Identification Number) 2101 CITYWEST BLVD. HOUSTON, TEXAS 77042-2827 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (713) 918-8800 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 204.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. On November 2, 2004, BMC Software, Inc. (the "Company") issued a press release announcing the election of Cosmo Santullo as its Senior Vice President - Worldwide Sales. In connection with the hiring of Mr. Santullo, the Company and Mr. Santullo entered into an Executive Employment Agreement effective November 1, 2004 (the "Agreement"). The Agreement is substantially similar to existing agreements with the Company's CEO and other senior executive officers and provides for an annual base salary for Mr. Santullo of $425,000. In addition, he is entitled to a target annual cash bonus equal to a 150% of his annual base salary. The actual amount of any such cash bonus is based on performance. The Agreement also provides Mr. Santullo with a one-time sign-on bonus of $50,000 and an option to purchase 250,000 shares of common stock of the Company. The Agreement provides that in the case of a termination of employment by the Company without cause, as defined in the Agreement, or by Mr. Santullo for good reason, as defined in the Agreement, Mr. Santullo would be entitled to a payment equal to two years of his then current base salary and a payment equal to two times his then current cash bonus target amount. The Agreement also provides that in the event of a termination of employment without cause or for good reason within 12 months of a change of control of the Company, Mr. Santullo would be entitled to a payment equal to two years of his then current base salary and a payment equal to two times his then current cash bonus target amount, would vest fully in outstanding options and would continue to receive medical and life insurance benefits at no cost for eighteen months. In consideration of the benefits bestowed under the Agreement, it restricts competitive activities for two years after termination, prohibits disclosure of Company confidential information and prohibits solicitation of Company employees. A copy of the Agreement is filed herewith as an exhibit. The Company also announced on November 2, 2004 that Darroll Buytenhuys would assume the position of Senior Vice President - Worldwide Marketing & Corporate Strategy effective November 1, 2004. In connection with assuming this position, the Company and Mr. Buytenhuys entered into an amendment to Mr. Buytenhuys' existing Executive Employment Agreement effective November 1, 2004 (the "Amendment"). The Amendment provides for the new title and continuation of Mr. Buytenhuys' annual base salary of $425,000 and target annual bonus of 150% of base salary. The Amendment also acknowledges that an event which constitutes good reason, as defined in his employment agreement, has occurred as of November 1, 2004 and that the period in which Mr. Buytenhuys may terminate his employment for good reason under his agreement has been extended until December 31, 2005. A copy of the Amendment is filed herewith as an exhibit. From time to time, the Company awards stock options and restricted shares to its executive officers. Such awards are made pursuant to form agreements which are filed herewith as exhibits. 2 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Exhibit - ----------- ------- 10.7(g) Amendment No. 5 to Executive Employment Agreement between BMC Software, Inc. and Darroll Buytenhuys. 10.13 Executive Employment Agreement between BMC Software, Inc. and Cosmo Santullo 10.14 Form of Stock Option Agreement employed under BMC Software, Inc. 1994 Employee Incentive Plan utilized for senior executive officers. 10.15 Form of Restricted Stock Agreement employed under BMC Software, Inc. 1994 Employee Incentive Plan utilized for senior executive officers.
3 SIGNATURE 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 hereunto duly authorized. Date: November 2, 2004 BMC SOFTWARE, INC. By: /s/ ROBERT H. WHILDEN, JR. -------------------------------- Robert H. Whilden, Jr. Senior Vice President, General Counsel and Secretary 4 EXHIBIT INDEX
Exhibit No. Exhibit - ----------- ------- 10.7(g) Amendment No. 5 to Executive Employment Agreement between BMC Software, Inc. and Darroll Buytenhuys. 10.13 Executive Employment Agreement between BMC Software, Inc. and Cosmo Santullo 10.14 Form of Stock Option Agreement employed under BMC Software, Inc. 1994 Employee Incentive Plan utilized for senior executive officers. 10.15 Form of Restricted Stock Agreement employed under BMC Software, Inc. 1994 Employee Incentive Plan utilized for senior executive officers.
3 EX-10.7.G 2 h19527exv10w7wg.txt EXECUTIVE EMPLOYMENT AGREEMENT - DARROLL BUYTENHUYS Exhibit 10.7(g) AMENDMENT NO. 5 TO EXECUTIVE EMPLOYMENT AGREEMENT Reference is hereby made to the Executive Employment Agreement dated April 6, 2002, as amended, (the "Agreement") between you and BMC Software, Inc. (the "Company"). For good and valuable consideration, the receipt of which is hereby mutually acknowledged, you and the Company have agreed to amend the Agreement effective November 1, 2004 as follows: 1. Section 2.3 Effective November 1, 2004, your title will be Senior Vice President Worldwide Marketing & Corporate Strategy. 2. Section 3.1(a) Your salary will remain at $425,000 per annum. 3. Section 3.1(e) You will continue to be eligible for a cash bonus target incentive equal to 150% of your salary and payable in accordance with the Company's annual incentive plan. 4. The provisions of Section 6.1(f) of the Agreement, which the Company acknowledges became operative for you on November 1, 2004, are hereby extended at your election until December 31, 2005. IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above. BMC Software, Inc. By: /s/ Jerome Adams SVP - Administration Accepted and Agreed to: /s/ Darroll Buytenhuys Darroll Buytenhuys 5 EX-10.13 3 h19527exv10w13.txt EXECUTIVE EMPLOYMENT AGREEMENT - COSMO SANTULLO Exhibit 10.13 EXECUTIVE EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") is made as of November 1, 2004 (the "Effective Date"), by and between BMC Software, Inc., a Delaware corporation (the "Employer"), and Mr. Cosmo Santullo (the "Executive"). The Employer and the Executive are each a "party" and are together "parties" to this Agreement. RECITALS WHEREAS, the Employer desires to employ the Executive, and the Executive wishes to accept such employment, upon the terms and conditions set forth in this Agreement. AGREEMENT NOW THEREFORE, in consideration of the employment compensation to be paid to the Executive and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties, intending to be legally bound, agree as follows: 1. DEFINITIONS For the purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1. "AGREEMENT" refers to this Employment Agreement, including all Exhibits attached hereto, as amended from time to time. "BENEFITS" as defined in Section 3.1(b). "BOARD OF DIRECTORS" refers to the board of directors of the Employer. "CHANGE OF CONTROL" refers to (i) the acquisition of at least 50% of Employer's outstanding voting stock; (ii) an unapproved change in the majority of the Employer's board of directors; (iii) a merger, consolidation, or similar corporate transaction in which the Company's shareholders immediately prior to the transaction do not own more than 60% of the voting stock of the surviving corporation in the transaction; and (iv) shareholder approval of the company's liquidation, dissolution, or sale or substantially all of its assets. "CONFIDENTIAL INFORMATION" means any and all: a. trade secrets (as defined herein) concerning the business and affairs of the Employer, product specifications, data, know-how, formulae, compositions, processes, 6 designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures, and architectures (and related formulae, compositions, processes, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information), and any other information, however documented, that is a trade secret; b. information concerning the business and affairs of the Employer (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; and c. notes, analysis, compilations, studies, summaries, and other material prepared by or for the Employer containing or based, in whole or in part, on any information included in the foregoing. "DISABILITY" as defined in Section 6.2. "EFFECTIVE DATE" is the date stated in the first paragraph of the Agreement. "EMPLOYEE INVENTION" shall mean any idea, invention, technique, modification, process, or improvement (whether patentable or not), any industrial design (whether registerable or not), any mask work, however fixed or encoded, that is suitable to be fixed, embedded or programmed in a semiconductor product (whether recordable or not), and any work of authorship (whether or not copyright protection may be obtained for it) created, conceived, or developed by the Executive, either solely or in conjunction with others, during the Employment Period, or a period that includes a portion of the Employment Period, that relates in any way to, or is useful in any manner in, the business then being conducted or proposed to be conducted by the Employer, and any such item created by the Executive, either solely or in conjunction with others, following termination of the Executive's employment with the Employer, that is based upon or uses Confidential Information. "EMPLOYMENT PERIOD" is the term of the Executive's employment under this Agreement. "FISCAL YEAR" shall mean the Employer's fiscal year, which shall end on March 31 of each year, or as changed from time to time. "FOR CAUSE" as defined in Section 6.3. "GOOD REASON" as defined in Section 6.3. "PERSON" is any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, 7 or governmental body. "PROPRIETARY ITEMS" as defined in Section 7.2(a)(iv). "SALARY" as defined in Section 3.1(a). "TRADE SECRETS" shall mean the whole or any part of any scientific or technical information, design, process, procedure, formula, or improvement that has value and that the owner has taken measures to prevent from becoming available to persons other than those selected by the owner to have access for limited purposes. 2. EMPLOYMENT TERMS AND DUTIES 2.1 EMPLOYMENT The Employer hereby employs the Executive, and the Executive hereby accepts employment by the Employer, upon the terms and conditions set forth in this Agreement. 2.2 EMPLOYMENT PERIOD Subject to the provisions of Section 6, the term of the Executive's employment under this Agreement will commence upon the Effective Date and shall continue in effect through the third anniversary of the Effective Date (the "Employment Period"); provided, however, that, subject to the provisions of Section 6, commencing on the day after the Effective Date and on each day thereafter, the Employment Period shall be automatically extended for one additional day unless the Employer shall give written notice to Executive that the Employment Period shall cease to be so extended, in which event the Employment Period shall terminate on the third anniversary of the date such notice is given. The Employment Period may be further extended by mutual agreement of the parties. 2.3 DUTIES The Executive will have such duties as are assigned or delegated to the Executive by the Chief Executive Officer, and will initially serve as the Employer's SVP Worldwide Sales and Services. The Executive will devote his entire business time, attention, skill, and energy exclusively to the business of the Employer, will use his best efforts to promote the success of the Employer's business, and will cooperate fully with the Chief Executive Officer in the advancement of the best interests of the Employer. The Executive's employment will be subject to the policies maintained and established by the Employer, from time to time. Nothing in this Section 2.3, however, will prevent the Executive from engaging in additional activities in connection with passive personal investments and community affairs that are not inconsistent with the Executive's duties under this Agreement. Additionally, nothing in this Section 2.3 will prevent the Executive from serving on the Board of Directors of other companies or organizations, or engaging in other activities, so long as such participation does not conflict with the interests or business of Employer or require such involvement as to interfere with the performance of the Executive's duties hereunder and has been 8 expressly approved by the Chief Executive Officer of Employer. If the Executive is elected as a director of the Employer or as a director or officer of any of its affiliates, the Executive will fulfill his duties as such director or officer without additional compensation. The Executive acknowledges and agrees that he owes a fiduciary duty of loyalty, fidelity and allegiance to act at all times in the best interests of the Employer. 9 3. COMPENSATION 3.1 COMPENSATION a. Salary. During the Employment Period, the Executive will be paid an annual base salary of $425,000 (the "Salary"), which will be payable in twenty-four (24) equal installments according to the Employer's customary payroll practices. Executive may be subject to such increases in Salary as deemed appropriate in the sole discretion of the Compensation Committee of the Board of Directors of Employer. b. Benefits. The Executive will, during the Employment Period, be permitted to participate in such pension, profit sharing, life insurance, hospitalization, major medical, and other employee benefit plans of the Employer that may be in effect from time to time, to the extent the Executive is eligible under the terms of those plans (collectively, the "Benefits"). c. Stock Options. The Executive will be entitled to receive, subject to approval of the Compensation Committee, an option to purchase 250,000 shares of common stock of the Employer. Such options will be subject to the terms and conditions of the BMC Software, Inc. 1994 Employee Incentive Plan and an Executive Stock Option Agreement and will have a strike price set on the Effective Date. d. Cash Bonus. Executive will be eligible for a cash bonus target equal to 150% of base salary as described in Attachment A incorporated herein by reference. Such bonus will be guaranteed at the target for the period from the Effective Date through December 31, 2004 (paid pro rata) and for the quarter ending March 31, 2005. e. Long Term Incentive Program. Executive will be eligible to participate in the Long Term Incentive Plan commencing at the beginning of the next Fiscal Year as approved by the BMC Board of Directors. f. Sign on Bonus. Executive will be paid a $50,000 bonus payable within the first 15 days of employment. 4. FACILITIES AND EXPENSES 4.1 FACILITIES. The Employer will furnish the Executive office space, equipment, supplies, and such other facilities and personnel as the Employer deems necessary or appropriate for the performance of the Executive's duties under this Agreement. 4.2 EXPENSES. 10 The Employer will pay on behalf of the Executive (or reimburse the Executive for) reasonable expenses incurred by the Executive at the request of, or on behalf of, the Employer in the performance of the Executive's duties pursuant to this Agreement, and in accordance with the Employer's employment policies, including reasonable expenses incurred by the Executive in attending business meetings, in appropriate business entertainment activities, and for promotional expenses. The Executive must file expense reports with respect to such expenses in accordance with the Employer's policies then in effect. 5. VACATIONS AND HOLIDAYS The Executive will be entitled to paid vacation during the term of the Agreement in accordance with the vacation policies of the Employer in effect for its employees from time to time. The Executive will also be entitled to the paid holidays and other paid leave set forth in the Employer's policies. 6. TERMINATION 6.1 EVENTS OF TERMINATION The Employment Period, the Executive's Salary and any and all other rights of the Executive under this Agreement or otherwise as an employee of the Employer will terminate (except as otherwise provided in this Section 6): a. upon the death of the Executive; b. upon the Disability (as defined in Section 6.2) of the Executive immediately upon notice from either party to the other; c. upon termination by the Employer for cause (as defined in Section 6.3); d. upon the voluntary retirement from or voluntary resignation of employment by the Executive for any reason other than those set forth in Section 6.1(f) below; e. upon termination by the Employer for any reason other than those set forth in Section 6.1(a) through 6.1(d) above; or f. upon voluntary resignation of employment by the Executive within 60 days of the occurrence of an event that constitutes Good Reason, as defined in Section 6.3 below. Upon termination of the Employment Period, as provided above or otherwise, Executive's rights respecting Benefits, Stock Options, and Cash Bonus will be determined under the applicable plan or program providing the same. 11 6.2 DEFINITION OF DISABILITY For purposes hereof, the term "Disability" shall mean an incapacity by accident, illness or other circumstance which renders the Executive mentally or physically incapable of performing the duties and services required of the Executive hereunder on a full-time basis for a period of at least 180 consecutive days. 6.3 DEFINITION OF "FOR CAUSE" AND "GOOD REASON" a. For purposes of Section 6.1, the phrase "for cause" means: (i) the Executive's continued and material failure to perform his obligations under this Agreement; (ii) the Executive's material failure to adhere to any Employer policy or code of conduct; (iii) the appropriation (or attempted appropriation) of a material business opportunity of the Employer, including attempting to secure or securing any personal profit in connection with any transaction entered into on behalf of the Employer; (iv) the Executive's engaging in conduct that is materially injurious to the Employer, (v) the misappropriation (or attempted misappropriation) of any of the Employer's funds or property; (vi) the conviction of or the entering of a guilty plea or plea of no contest with respect to, a felony, the equivalent thereof, or any other crime with respect to which imprisonment is a punishment or; (vii) the conviction of the Executive by a court of competent jurisdiction of a crime involving moral turpitude. The determination of whether the Executive's employment is terminated for cause shall be made solely by the Employer, which shall act in good faith in making such determination. b. "Good Reason" means: i. The occurrence, prior to a Change of Control or after the date which is 12 months after a Change of Control occurs, of any one or more of the following events without the Executive's express written consent: (i) a significant change in the Executive's titles or offices from those previously applicable to the Executive (but not an alteration in Executive's reporting responsibilities); (ii) a reduction in the Executive's Salary from that provided to him immediately on the Effective Date of this Agreement (or the effective date of any extension of this Agreement pursuant to Section 2.2 or as the same may be increased from time to time; or (iii) a diminution in employee benefits (including but not limited to medical, dental, life insurance and long-term disability plans) and perquisites applicable to the Executive from those substantially similar to the employee benefits and perquisites provided by the Employer (including subsidiaries) to executives with comparable duties; or ii. The occurrence, within 12 months after the date upon which a Change of Control occurs, of any one or more of the following events without Executive's express written consent: (i) a change in Executive's reporting responsibilities, titles or offices as in effect immediately prior to the Change of Control or any removal of Executive from, or any failure to re-elect Executive to, any of such positions which has the effect of diminishing Executive's responsibility or authority; (ii) a 12 reduction by the Employer or a subsidiary thereof in Executive's Salary as in effect immediately prior to the Change of Control or as the same may be increased from time to time or a change in the eligibility requirements or performance criteria under any bonus, incentive or compensation plan, program or arrangement under which Executive is covered immediately prior to the Change of Control which adversely affects Executive; (iii) the Employer or a subsidiary thereof requiring Executive to be permanently based anywhere other than within 50 miles of Executive's job location at the time of the Change of Control; (iv) without replacement by a plan providing benefits to Executive equal to or greater than those discontinued, the failure by the Employer or a subsidiary thereof to continue in effect, within its maximum stated term, any pension, bonus, incentive, stock ownership, purchase, option, life insurance, health, accident, disability, or any other employee benefit plan, program or arrangement in which Executive is participating at the time of the Change of Control, or the taking of any action by the Employer or a subsidiary thereof that would adversely affect Executive's participation or materially reduce Executive's benefits under any of such plans; (v) the taking of any action by the Employer or a subsidiary thereof that would materially adversely affect the physical conditions existing at the time of the Change of Control in or under which Executive performs his employment duties; (vi) if Executive's primary employment duties are with a subsidiary of the Employer, the sale, merger, contribution, transfer or any other transaction in conjunction with which the Employer's ownership interest in the subsidiary decreases below a majority interest; or (vii) any material variance from the terms of this Agreement by the Employer or a subsidiary thereof. 6.4 SEVERANCE Should the Executive's employment with the Employer be terminated during the Employment Period pursuant to Section 6.1(e) or Section 6.1(f) above, the Executive shall be entitled to: a. a payment equal to two years of his then current Salary; and b. a payment equal to two times his then current cash bonus target amount. Such payments under this section will be made no later than 30 days following the termination from employment. Severance payments do not constitute continued employment beyond the termination date. 6.5 CHANGE OF CONTROL If, within 12 months of a Change of Control, the Executive's position is eliminated or the Executive is terminated pursuant to Section 6.1(e) or 6.1(f) above, regardless of whether such termination event occurs during or after the Employment Period, the Executive shall be entitled to the following in lieu of the amounts set forth in Section 6.4: 13 a. a payment equal to two years of his then current Salary; b. a payment equal to two times his then current cash bonus target amount; c. potential vesting of Executive's Stock Option award pursuant to Section 3.1(c) above, subject to the terms and conditions of the Executive Stock Option Agreement and d. continued medical and life insurance benefits at no cost to the Executive, for the Executive and his dependents (including his spouse) who were covered as of such termination event under the medical and life insurance benefit plan as in effect for employees of the Employer during the coverage period, or the substantial equivalence, for 18 months or until such time that he is re-employed and is provided medical and life insurance benefits (which coverage shall be promptly reported to the Employer by the Executive) whichever is sooner. Severance payments do not constitute continued employment beyond the termination date. Notwithstanding anything to the contrary in this Agreement, if the Executive is a "disqualified individual" (as defined in Section 280G(c) of the Internal Revenue Code of 1986, as amended (the "Code")), and the severance benefits provided for in this Section 6.5, together with any other payments and benefits which the Executive has the right to receive from the Employer and its affiliates, would constitute a "parachute payment" (as defined in Section 280G(b)(2) of the Code), then the severance benefits provided hereunder (beginning with any benefit to be paid in cash hereunder) shall be either (1) reduced (but not below zero) so that the present value of such total amounts and benefits received by the Executive will be one dollar ($1.00) less than three times the Executive's "base amount" (as defined in Section 280G of the Code) and so that no portion of such amounts and benefits received by the Executive shall be subject to the excise tax imposed by Section 4999 of the Code or (2) paid in full, whichever produces the better net after-tax position to the Executive (taking into account any applicable excise tax under Section 4999 of the Code and any other applicable taxes). The determination as to whether any such reduction in the amount of the severance benefit is necessary shall be made initially by the Employer in good faith. If a reduced severance benefit is paid hereunder in accordance with clause (1) of the first sentence of this paragraph and through error or otherwise that payment, when aggregated with other payments and benefits from the Employer (or its affiliates) used in determining if a "parachute payment" exists, exceeds one dollar ($1.00) less than three times the Executive's base amount, then the Executive shall immediately repay such excess to the Employer upon notification that an overpayment has been made. 6.6 NO MITIGATION Any remuneration received by the Executive from a third party following the Employment Period shall not apply to reduce the Employer's obligations to make payments hereunder. 6.7 LIQUIDATED DAMAGES 14 Due to the difficulties in estimating damages for an early termination of the Employment Period, the Employer and the Executive agree that the payments, if any, to be received by the Executive hereunder shall be received as liquidated damages. 7. NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS 7.1 ACKNOWLEDGMENTS BY THE EXECUTIVE The Executive acknowledges that (a) prior to and during the Employment Period and as a part of his employment, the Executive has been and will be afforded access to Confidential Information; (b) public disclosure of such Confidential Information could have an adverse effect on the Employer and its business; (c) because the Executive possesses substantial technical expertise and skill with respect to the Employer's business, the Employer desires to obtain exclusive ownership of each Employee Invention, and the Employer will be at a substantial competitive disadvantage if it fails to acquire exclusive ownership of each Employee Invention; and (d) the provisions of this Section 7 are reasonable and necessary to prevent the improper use or disclosure of Confidential Information and to provide the Employer with exclusive ownership of all Employee Inventions. 7.2 AGREEMENTS OF THE EXECUTIVE In consideration of the compensation and benefits to be paid or provided to the Executive by the Employer under this Agreement, the Executive covenants the following: a. Confidentiality. i. The Executive will hold in confidence the Confidential Information and will not disclose it to any person except with the specific prior written consent of the Employer or except as otherwise expressly permitted by the terms of this Agreement. ii. Any trade secrets of the Employer will be entitled to all of the protections and benefits under any applicable law. If any information that the Employer deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement. The Executive hereby waives any requirement that the Employer submit proof of the economic value of any trade secret or post a bond or other security. iii. None of the foregoing obligations and restrictions applies to any part of the Confidential Information that the Executive demonstrates was or became generally available to the public other than as a result of a disclosure by the Executive. iv. The Executive will not remove from the Employer's premises (except to 15 the extent such removal is for purposes of the performance of the Executive's duties at home or while traveling, or except as otherwise specifically authorized by the Employer) any document, record, notebook, plan, model, component, device, or computer software or code, whether embodied in a disk or in any other form (collectively, the "Proprietary Items"). The Executive recognizes that, as between the Employer and the Executive, all of the Proprietary Items, whether or not developed by the Executive, are the exclusive property of the Employer. Upon termination of this Agreement by either party, or upon the request of the Employer during the Employment Period, the Executive will return to the Employer all of the Proprietary Items in the Executive's possession or subject to the Executive's control, and the Executive shall not retain any copies, abstracts, sketches, or other physical embodiment of any of the Proprietary Items. b. Employee Inventions. Each Employee Invention will belong exclusively to the Employer. The Executive acknowledges that all of the Executive's writing, works of authorship, and other Employee Inventions are works made for hire and the property of the Employer, including any copyrights, patents, or other intellectual property rights pertaining thereto. If it is determined that any such works are not works made for hire, the Executive hereby assigns to the Employer all of the Executive's right, title, and interest, including all rights of copyright, patent, and other intellectual property rights, to or in such Employee Inventions. The Executive covenants that he will promptly: i. disclose to the Employer in writing any Employee Invention; ii. assign to the Employer or to a party designated by the Employer, at the Employer's request and without additional compensation, all of the Executive's right to the Employee Invention for the United States and all foreign jurisdictions; iii. execute and deliver to the Employer such applications, assignments, and other documents as the Employer may request in order to apply for and obtain patents or other registrations with respect to any Employee Invention in the United States and any foreign jurisdictions; iv. sign all other papers necessary to carry out the above obligations; and v. give testimony and render any other assistance in support of the Employer's rights to any Employee Invention. c. Notice of Intent to Resign. Executive agrees to provide Employer with 90 days advance notice of his intention to resign ("Notice Period"). During the Notice Period, Executive shall continue in the diligent fulfillment of all duties of his position and this Agreement. Should Executive fail to provide Employer with the full Notice Period, Executive shall forfeit that portion of his earned pro-rata yearly cash bonus as follows: (90 - number of full days of advance notice) / 90) X(times) pro-rata earned yearly cash bonus 16 = amount forfeited by Executive. Pro-rata earned yearly cash bonus is: (unconditional portion of yearly cash bonus, if any, targeted for Executive in the current Fiscal Year) / (number of full months worked in the current Fiscal Year / 12). d. NonDisparagement. Executive shall not disparage the Employer or any of its directors, officers, employees, or agents. e. Creative Works. Executive shall not create, assist with or consult on any creative works which discuss, describe or reference Employer or any executive of Employer. Creative works includes but is not limited to novels, nonfiction writings, any authored work, plays, screenplays, musicals or the like. 7.3 DISPUTES OR CONTROVERSIES The Executive recognizes that should a dispute or controversy arising from or relating to this Agreement be submitted for adjudication to any court, arbitration panel, or other third party, the preservation of the secrecy of Confidential Information may be jeopardized. All pleadings, documents, testimony, and records relating to any such adjudication will be maintained in secrecy and will be available for inspection by the Employer, the Executive, and their respective attorneys and experts, who will agree, in advance and in writing, to receive and maintain all such information in secrecy, except as may be limited by them in writing. 8. NON-COMPETITION AND NON-INTERFERENCE 8.1 ACKNOWLEDGMENTS BY THE EXECUTIVE The Executive acknowledges that: (a) the services to be performed by him under this Agreement are of a special, unique, unusual, extraordinary, and intellectual character; (b) the Employer's business is international in scope and its products are marketed throughout the United States and the world; (c) the Employer competes with other businesses that are or could be located in any part of the United States or the world; (d) the provisions of this Section 8 are reasonable and necessary to protect the Employer's business; and (e) in connection with the fulfillment of his duties hereunder and as an employee of the Employer, the Employer will provide Executive with Confidential Information necessitating the execution of the covenants contained in this Section 8. 8.2 COVENANTS OF THE EXECUTIVE In consideration of the acknowledgments by the Executive, and in consideration of the compensation and benefits to be paid or provided to the Executive by the Employer, the Executive covenants that during and for two (2) years following the Employment Period he will not, directly or indirectly: 17 a. except in the course of his employment hereunder, engage or invest in, own, manage, operate, finance, control, or participate in the ownership, management, operation, financing, or control of, be employed by, associated with, or in any manner connected with, lend the Executive's name or any similar name to, lend Executive's credit to or render services or advice to, any business whose products or activities compete in whole or in part with the products or activities of the Employer anywhere in the world, provided, however, that the Executive may purchase or otherwise acquire up to (but not more than) five percent (5%) of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934, as amended; b. whether for the Executive's own account or for the account of any other person, solicit business of the same or similar type being carried on by the Employer, from any person known by the Executive to be a customer or a potential customer of the Employer, whether or not the Executive had personal contact with such person during and by reason of the Executive's employment with the Employer; or c. whether for the Executive's own account or the account of any other person, (i) solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is an employee (or was an employee within two (2) years of the date in question) of the Employer at any time during the Employment Period or in any manner induce or attempt to induce any employee of the Employer to terminate his employment with the Employer; or (ii) interfere with the Employer's relationship with any person, including any person who at any time during the Employment Period was an employee, contractor, supplier, or customer of the Employer. If any covenant in this Section 8.2 is held to be unreasonable, arbitrary, or against public policy, such covenant will be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be effective, binding, and enforceable against the Executive. The period of time applicable to any covenant in this Section 8.2 will be extended by the duration of any violation by the Executive of such covenant. 9. GENERAL PROVISIONS 9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY The Executive acknowledges that the injury that would be suffered by the Employer as a result of a breach of the provisions of this Agreement (including any provision of Sections 7 and 8) would be irreparable and that an award of monetary damages to the Employer for such a breach would be an inadequate remedy. Consequently, the Employer will have the right, in addition to any 18 other rights it may have, to obtain injunctive relief to restrain any breach or threatened breach or otherwise to specifically enforce any provision of this Agreement, and the Employer will not be obligated to post bond or other security in seeking such relief. 9.2 COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT COVENANTS The covenants by the Executive in Sections 7 and 8 are essential elements of this Agreement, and without the Executive's agreement to comply with such covenants, the Employer would not have entered into this Agreement or employed the Executive. The Employer and the Executive have independently consulted with their respective counsel and have been advised in all respects concerning the reasonableness and propriety of such covenants, with specific regard to the nature of the business conducted by the Employer. If the Executive's employment hereunder expires or is terminated, this Agreement will continue in full force and effect as is necessary or appropriate to enforce the covenants and agreements of the Executive in Sections 7 and 8. 9.3 REPRESENTATIONS AND WARRANTIES BY THE EXECUTIVE The Executive represents and warrants to the Employer that the execution and delivery by the Executive of this Agreement do not, and the performance by the Executive of the Executive's obligations hereunder will not, with or without the giving of notice or the passage of time, or both: (a) violate any judgment, writ, injunction, or order of any court, arbitrator, or governmental agency applicable to the Executive; or (b) conflict with, result in the breach of any provisions of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is or may be bound. The Executive further specifically represents and warrants that he is not subject to, nor will he violate, any agreement not to compete upon the execution and delivery by him of this Agreement. The Executive represents and warrants that he will not utilize or divulge any proprietary materials or information from his previous employers and acknowledges that Employer has prohibited Executive from bringing any such materials on to Employer's premises and has advised Executive that Executive's failure to adhere to these prohibitions will subject Executive to immediate termination. 9.4 OBLIGATIONS CONTINGENT ON PERFORMANCE The obligations of the Employer hereunder, including its obligation to pay the compensation provided for herein, are contingent upon the Executive's performance of the Executive's obligations hereunder. 9.5 WAIVER The rights and remedies of the parties to this Agreement are cumulative and not alternative. 19 Neither the failure nor any delay by either party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement. 9.6 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs, and legal representatives, including any entity with which the Employer may merge or consolidate or to which all or substantially all of its assets may be transferred. The duties and covenants of the Executive under this Agreement, being personal, may not be delegated or assigned. 9.7 NOTICES All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by facsimile (with written confirmation of receipt), provided that a copy is mailed by registered mail, return receipt requested and signed for by the party required to receive notice, or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties): If to Employer: BMC Software, Inc. 2101 CityWest Blvd. Houston, Texas 77042 Telephone No.: (713) 918-8800 Facsimile No.: (713) 918-1110 Attn: General Counsel If to the Executive, to the last address and phone number provided by Executive 9.8 ENTIRE AGREEMENT; AMENDMENTS Except as provided in (a) plans and programs of the Employer referred to in Sections 3.1(b) through (d), and (b) any signed written agreement contemporaneously or hereafter executed by the 20 Employer and the Executive, this Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof. Notwithstanding the foregoing, this Agreement shall not be construed to supersede any stock option agreements or restricted stock agreements entered into between Executive and Employer at any time prior to the execution of this Agreement. This Agreement may not be amended orally, but only by an agreement in writing signed by the parties hereto. 9.9 GOVERNING LAW THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. 9.10 ARBITRATION In the event that there shall be any dispute arising out of or in any way relating to this Agreement, the contemplated transactions, any document referred to or incorporated herein by reference or centrally related to the subject matter hereof, or the subject matter of any of the same, the parties covenant and agree as follows: a. The parties shall first use their reasonable best efforts to resolve such dispute among themselves, with or without mediation. b. If the parties are unable to resolve such dispute among themselves, such dispute shall be submitted to binding arbitration in Houston, Texas, under the auspices of, and pursuant to the rules of, the American Arbitration Association's Commercial Arbitration Rules as then in effect, or such other procedures as the parties may agree to at the time, before a tribunal of three (3) arbitrators, one of which shall be selected by the Executive, one of which shall be selected by the Employer, and the third of which shall be selected by the two (2) arbitrators so selected. Any award issued as a result of such arbitration shall be final and binding between the parties, and shall be enforceable by any court having jurisdiction over the party against whom enforcement is sought. A ruling by the arbitrators shall be non-appealable. The parties agree to abide by and perform any award rendered by the arbitrators. If either the Executive or Employer seeks enforcement of the terms of this Agreement or seeks enforcement of any award rendered by the arbitrators, then the prevailing party (designated by the arbitrators) to such proceeding(s) shall be entitled to recover its costs and expenses (including applicable travel expenses) from the non-prevailing party, in addition to any other relief to which it may be entitled. If a dispute arises and one party fails or refuses to designate an arbitrator within thirty (30) days after receipt of a written notice that an arbitration proceeding is to be held, then the dispute shall be resolved solely by the arbitrator designated by the other party and such arbitration award shall be as binding as if three (3) arbitrators had participated in the arbitration proceeding. Either the Executive or the Employer may cause an arbitration proceeding to commence by giving the other party notice in writing of such arbitration. Executive and the Employer covenant and agree to act as expeditiously as practicable in order to resolve all disputes by arbitration. Notwithstanding 21 anything in this section to the contrary, neither Executive nor the Employer shall be precluded from seeking court action in the event the action sought is either injunctive action, a restraining order or other equitable relief. The arbitration proceeding shall be held in English. c. Legal process in any action or proceeding referred to in the preceding section may be served on any party anywhere in the world. d. Except as expressly provided herein and except for injunctions and other equitable remedies that are required in order to enforce this Agreement, no action may be brought in any court of law and EACH OF THE PARTIES WAIVES ANY RIGHTS THAT IT MAY HAVE TO BRING A CAUSE OF ACTION IN ANY COURT OR IN ANY PROCEEDING INVOLVING A JURY TO THE MAXIMUM EXTENT PERMITTED BY LAW. Each party acknowledges that it has been represented by legal counsel of its own choosing and has been advised of the intent, scope and effect of this Section 9.10 and has voluntarily entered into this Agreement and this Section 9.10. e. Excluded from this Section 9.10 are any claims for temporary injunctive relief to enforce Sections 7 and 8 of this Agreement. 9.11 SECTION HEADINGS, CONSTRUCTION The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to "Section" or "Sections" refer to the corresponding Section or Sections of this Agreement unless otherwise specified. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word "including" does not limit the preceding words or terms. 9.12 SEVERABILITY If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 9.13 COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. 9.14 WAIVER OF JURY TRIAL THE PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION 22 WITH RESPECT TO THIS AGREEMENT. 9.15 WITHHOLDING OF TAXES AND OTHER EMPLOYEE DEDUCTIONS The Employer may withhold from any payments and benefits made pursuant to this Agreement all federal, state, city, and other taxes as may be required pursuant to any law or governmental regulation or ruling and all other normal deductions made with respect to the Employer's employees generally. 23 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written above. EMPLOYER: BMC Software, Inc. By: /s/ Jerome Adams Name: Jerome Adams Title: SVP Administration EXECUTIVE: By: /s/ Cosmo Santullo Name: Cosmo Santullo 24 Attachment A BMC SOFTWARE, INC. EXECUTIVE EMPLOYMENT AGREEMENT CASH BONUS DESCRIPTION The Executive will, during the Employment Period, be permitted to participate in the BMC Annual Executive Incentive Plan that may be in effect from time to time. During the employment period, the Executive will be eligible to receive a target incentive, which is 150% of base salary. The actual amount received is not guaranteed and is dependent on the performance of the Company and the Executive in accordance with the Annual Incentive Plan established for each fiscal year during the employment period. Each fiscal year, the Executive will receive a detailed description of the Annual Incentive Plan and the targeted measures and objectives for that year. 25 EX-10.14 4 h19527exv10w14.txt FORM OF STOCK OPTION AGREEMENT Exhibit 10.14 NONSTATUTORY STOCK OPTION AGREEMENT This Nonstatutory Stock Option Agreement is made as of , between BMC Software, Inc., a Delaware corporation (the "Company"), and ("Executive"). To carry out the purposes of the BMC Software, Inc. 1994 Employee Incentive Plan (the "Plan"), by affording Executive the opportunity to purchase shares of common stock, par value $.01, of the Company ("Stock"), and in consideration of the mutual agreements and other matters set forth herein, in the Plan, and in that certain Employment Agreement dated , by and between the Company and Executive, as the same may be amended from time to time (the "Employment Agreement"), the Company and Executive hereby agree as follows: 1. GRANT OF OPTION. The Company hereby irrevocably grants to Executive the right and option ("Option") to purchase all or any part of an aggregate of <# of SHARES> shares of Stock, on the terms and conditions set forth herein and in the Plan, which Plan is incorporated herein by reference as a part of this Agreement. This Option shall not be treated as an incentive stock option within the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code"). 2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to the exercise of this Option shall be $ per share. For all purposes of this Agreement, fair market value of Stock shall be determined in accordance with the provisions of the Plan. 3. EXERCISE OF OPTION. Subject to the earlier expiration of this Option as herein provided, this Option may be exercised, by written notice (in the form prescribed by the Company from time to time) to the Company at its principal executive office addressed to the attention of the President or the Treasurer, at any time and from time to time after the date of grant hereof, but, this Option shall not be exercisable for more than a percentage of the aggregate number of shares offered by this Option determined in accordance with the following schedule:
PERCENTAGE OF SHARES EXERCISE DATE THAT MAY BE PURCHASED ------------- --------------------- less than 3 months 0% 3 months or more, but less than 6 months 6 1/4% 6 months or more, but less than 9 months 12 1/2% 9 months or more, but less than 12 months 18 3/4% 12 months or more, but less than 15 months 25% 15 months or more, but less than 18 months 31 1/4% 18 months or more, but less than 21 months 37 1/2% 21 months or more, but less than 24 months 43 3/4% 24 months or more, but less than 27 months 50% 27 months or more, but less than 30 months 56 1/4% 30 months or more, but less than 33 months 62 1/2%
26 33 months or more, but less than 36 months 68 3/4% 36 months or more, but less than 39 months 75% 39 months or more, but less than 42 months 81 1/4% 42 months or more, but less than 45 months 87 1/2% 45 months or more, but less than 48 months 93 3/4% 48 months or more 100%
Notwithstanding the foregoing, if, within the 12-month period beginning on the date upon which a Change of Control occurs, Executive's employment with the Company is terminated by the Company without Cause or by Executive within 60 days of an event that constitutes Good Reason, then this Option shall become immediately and fully exercisable on the date of such termination. For purposes of the preceding sentence, the terms "Change of Control," "Cause" and "Good Reason" shall have the meanings assigned to such terms in the Employment Agreement. Additionally, in the event Executive takes an unpaid leave of absence from the Company (1) Executive's right to exercise this Option shall be suspended three months after the beginning of such leave, (2) Executive's right to exercise this Option shall be reinstated if Executive returns to active employment with the Company within 12 months after the beginning of such leave, and (3) if Executive does not return to active employment with the Company within 12 months after the beginning of such leave, then, for purposes of this Option, Executive shall be considered to have terminated employment on the date such leave began. Further, notwithstanding the exercise schedule set forth above, (i) while Executive is on an unpaid leave of absence, further vesting of shares stops and this Option is exercisable (to the extent provided in the preceding sentence) only as to the number of shares Executive was entitled to purchase hereunder as of the date such leave began, and (ii) if Executive returns to active employment with the Company within 12 months after the beginning of such leave, then the exercise schedule set forth above shall be reinstated (subject to the provisions of clause (i) of this sentence). This Option is not transferable otherwise than by bequest or the laws of descent and distribution. This Option may be exercised only while Executive remains an employee of the Company and will terminate and cease to be exercisable upon Executive's termination of employment with the Company, except that: (a) If Executive's employment with the Company terminates by reason of Disability (as such term is defined in the Employment Agreement as in effect on its original effective date), then this Option may be exercised by Executive (or Executive's estate or the person who acquires this Option by will or the laws of descent and distribution or otherwise by reason of the death of Executive) at any time during the period of one year following such termination, but only as to the number of shares Executive was entitled to purchase hereunder as of the date Executive's employment so terminates. (b) If Executive dies while in the employ of the Company, then Executive's estate, or the person who acquires this Option by will or the laws of descent and distribution or otherwise by reason of the death of Executive, may exercise this Option at any time during the period of one year following the date of Executive's death, as follows: (i) if Executive had attained age 65 27 at the time of Executive's death, then this Option may be exercised in full; and (ii) if Executive had not attained age 65 at the time of Executive's death, then this Option may be exercised only as to the number of shares Executive was entitled to purchase hereunder as of the date of Executive's death. (c) If Executive's employment with the Company terminates for any reason other than as described in (a) or (b) above, then, unless such employment is terminated for Cause (as such term is defined in the Employment Agreement as in effect on its original effective date) or as otherwise provided in Paragraph 7 below, this Option may be exercised by Executive at any time during the period of one year following such termination, or by Executive's estate (or the person who acquires this Option by will or the laws of descent and distribution or otherwise by reason of the death of Executive) during a period of one year following Executive's death if Executive dies during such one year period, but in each case only as to the number of shares Executive was entitled to purchase hereunder upon exercise of this Option as of the date Executive's employment so terminates. This Option shall not be exercisable in any event after the expiration of ten years from the date of grant hereof, and this Option shall not become exercisable with respect to any additional shares after termination of Executive's employment. Except as provided in Paragraph 4, the purchase price of shares as to which this Option is exercised shall be paid in full at the time of exercise in cash (including check, bank draft or money order payable to the order of the Company). No fraction of a share of Stock shall be issued by the Company upon exercise of an Option or accepted by the Company in payment of the purchase price thereof; rather, Executive shall provide a cash payment for such amount as is necessary to effect the issuance and acceptance of only whole shares of Stock. Unless and until a certificate or certificates representing such shares shall have been issued by the Company to Executive, Executive (or the person permitted to exercise this Option in the event of Executive's death) shall not be or have any of the rights or privileges of a stockholder of the Company with respect to shares acquirable upon an exercise of this Option. 4. CASHLESS EXERCISE. Executive (or the person permitted to exercise this Option in the event of Executive's death) may direct, in a properly executed written notice, a cashless exercise of this Option pursuant to the procedures established by the Committee and in effect on the date of such exercise of this Option. Notwithstanding the foregoing, the Company shall not be required to comply with, and may unilaterally terminate, the right of Executive (or such person) to request a cashless exercise of this Option if, as a result of a change in the accounting rules and regulations applicable to the Company, or the interpretation thereof, compliance with such provisions will result in the imposition of adverse financial reporting requirements on the Company. 5. WITHHOLDING OF TAX. To the extent that the exercise of this Option or the disposition of shares of Stock acquired by exercise of this Option results in compensation income to Executive for federal, state or foreign income tax purposes, Executive shall deliver to the Company at the time of such exercise or disposition such amount of money or shares of Stock as the Company may require to meet its obligation under applicable tax laws or regulations, and, if Executive fails to do so, the Company is authorized to withhold from any cash or Stock remuneration then or thereafter payable to Executive any tax required to be withheld by reason of such resulting compensation income. Upon an exercise of this Option, the Company is further authorized in its discretion to satisfy any such withholding requirement out of any cash or shares of Stock distributable to Executive upon such exercise. 28 6. STATUS OF STOCK. Until the shares of Stock acquirable upon the exercise of this Option have been registered for issuance under the Securities Act of 1933, as amended (the "Act"), the Company will not issue such shares unless the holder of this Option provides the Company with a written opinion of legal counsel, who shall be satisfactory to the Company, addressed to the Company and satisfactory in form and substance to the Company's counsel, to the effect that the proposed issuance of such shares to such Option holder may be made without registration under the Act. In the event exemption from registration under the Act is available upon an exercise of this Option, Executive (or the person permitted to exercise this Option in the event of Executive's death), if requested by the Company to do so, will execute and deliver to the Company in writing an agreement containing such provisions as the Company may require to assure compliance with applicable securities laws. Executive agrees that the shares of Stock which Executive may acquire by exercising this Option will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal, state, or foreign securities laws. Executive also agrees that (a) the certificates representing the shares of Stock purchased under this Option may bear such legend or legends as the Company deems appropriate in order to assure compliance with applicable securities laws, (b) the Company may refuse to register the transfer of the shares of Stock purchased under this Option on the stock transfer records of the Company if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law, and (c) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the shares of Stock purchased under this Option. 7. OBLIGATIONS UNDER THE EMPLOYMENT AGREEMENT. In connection with Executive's employment by the Company, the Company or an affiliate thereof shall provide Executive with access to the confidential information of the Company and its affiliates, or shall provide Executive the opportunity to develop business good will inuring to the benefit of the Company and its affiliates, or shall entrust business opportunities to Executive. Executive has agreed, and hereby agrees, as specified in more detail in the Employment Agreement and/or Executive's Invention and Non-Disclosure Agreement with the Company, to maintain the confidentiality of the Company's and its affiliates' information and to exercise the highest measures of fidelity and loyalty in the protection and preservation of the Company's and its affiliates' goodwill and business opportunities. As part of the consideration for the Option granted to Executive hereunder; to protect the Company's and its affiliates' confidential information, the business good will of the Company and its affiliates that has been and will in the future be developed in Executive, or the business opportunities that have been and will in the future be disclosed or entrusted to Executive by the Company and its affiliates; and as an additional incentive for the Company and Executive to enter into this Agreement, the Company and Executive agree that if, during the term of Executive's employment with the Company or within a 24-month period following the date upon which Executive terminates employment with the Company, Executive fails for any reason to comply with any of the restrictive covenants set forth in Sections 9 and 10 of the Employment Agreement (as in effect on the original effective date of the Employment Agreement), then (a) this Option shall immediately terminate and cease to be exercisable and (b) the Company shall be entitled to recover from Executive, and Executive shall pay to the Company, an amount of money equal to A multiplied by B, where A equals the amount of the gain, if any, that Executive received from the exercise of this Option during the period beginning on the date that is one year before the date of Executive's termination of employment with the Company and ending on the date this Option terminates 29 and ceases to be exercisable as provided herein, and B equals the fraction X divided by Y, where X equals 730 minus the number of consecutive days following Executive's termination of employment with the Company during which Executive remained in compliance with the restrictive covenants set forth in Sections 7 and 8 of the Employment Agreement, and Y equals 730. If any of the restrictions set forth in this Paragraph 7 are found by a court to be unreasonable, or overly broad in any manner, or otherwise unenforceable, the parties hereto intend for such restrictions to be modified by the court so as to be reasonable and enforceable and, as so modified, to be fully enforced. 8. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, Executive shall be considered to be in the employment of the Company as long as Executive remains an employee of either the Company, an affiliate of the Company, a parent or subsidiary corporation (as defined in section 424 of the Code) of the Company, or a corporation or a parent or subsidiary of such corporation assuming or substituting a new option for this Option. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the committee charged with the general administration of the Plan, and its determination shall be final. Unless otherwise provided in a written employment agreement, nothing herein shall modify the at-will nature of the employment relationship between Executive and the Company. 9. SURRENDER OF OPTION. At any time and from time to time prior to the termination of this Option, Executive may surrender all or a portion of this Option to the Company for no consideration by providing written notice to the Company at its principal executive office addressed to the attention of the President or the Treasurer. Such notice shall specify the number of shares with respect to which this Option is being surrendered and, if this Option is being surrendered with respect to less than all of the shares then subject to this Option, then such notice shall also specify the date upon which this Option became (or would become) exercisable in accordance with Paragraph 3 with respect to the shares being surrendered. 10. BINDING EFFECT; CONTROLLING DOCUMENT. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Executive. In the event of a conflict between the text of this Agreement and the Employment Agreement, the text of this Agreement shall control. 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, UNITED STATES OF AMERICA, APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS. 30 IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and Executive has executed this Agreement, all as of the day and year first above written. BMC SOFTWARE, INC. BY:____________________________________________ JEROME ADAMS SENIOR VICE PRESIDENT - HUMAN RESOURCES _______________________________________________ EXECUTIVE 31 EX-10.15 5 h19527exv10w15.txt FORM OF RESTRICTED STOCK AGREEMENT Exhibit 10.15 RESTRICTED STOCK AGREEMENT AGREEMENT made as of the , 2004, between BMC SOFTWARE, INC., a Delaware corporation (the "Company"), and ("Executive"). 1. AWARD. Pursuant to the BMC SOFTWARE, INC. 1994 EMPLOYEE INCENTIVE PLAN (the "Plan"), as of the date of this Agreement, <# of SHARES> shares (the "Restricted Shares") of BMC Software, Inc. common stock, par value $.01 per share, shall be issued as hereinafter provided in Executive's name subject to certain restrictions thereon. The Restricted Shares shall be issued upon acceptance hereof by Executive and upon satisfaction of the conditions of this Agreement. Executive acknowledges receipt of a copy of the Plan, and agrees that this award of Restricted Shares shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof. 2. DEFINITIONS. For purposes of this Agreement, the following terms "Cause," "Change of Control," "Disability" and "Good Reason" shall have the meanings assigned to such terms in the Employment Agreement (as defined below) as in effect on its original effective date, and the following capitalized words shall have the meanings indicated below: (a) "Change of Control Termination" shall mean a termination of Executive's employment with the Company within the 12-month period beginning on the date upon which a Change of Control occurs, which termination of employment is by the Company without Cause or by Executive within 60 days of an event that constitutes Good Reason. (b) "Employment Agreement" shall mean that certain Employment Agreement dated March 9, 2004, by and between the Company and Executive, as the same may be amended from time to time. (c) "Forfeiture Restrictions" shall mean the restrictions to which the Restricted Shares are subject as described in Section 3(a) hereof. 3. RESTRICTED SHARES. Executive hereby accepts the Restricted Shares when issued and agrees with respect thereto as follows: (a) FORFEITURE RESTRICTIONS. The Restricted Shares shall not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions, and except as provided in (b) below, in the event Executive's employment with the Company shall terminate for any reason, Executive shall, for no consideration, forfeit to the Company all Restricted Shares to the extent then subject to the Forfeiture Restrictions. The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Shares. 32 (b) LAPSE OF FORFEITURE RESTRICTIONS. The Forfeiture Restrictions shall lapse as to the Restricted Shares in accordance with the following schedule provided that Executive has been continuously employed by the Company from the date of this Agreement through the lapse date:
PERCENTAGE OF TOTAL NUMBER OF RESTRICTED SHARES AS TO WHICH LAPSE DATE FORFEITURE RESTRICTIONS LAPSE - ---------- ----------------------------- March 9, 2005 33% March 9, 2006 66% March 9, 2007 100%
Additionally, in the event that Executive's employment with the Company terminates by reason of death or Disability, the Forfeiture Restrictions shall lapse as to all of the Restricted Shares then subject to the Forfeiture Restrictions on the date of such termination. Further, the Forfeiture Restrictions shall lapse as to all of the Restricted Shares then subject to the Forfeiture Restrictions on the date Executive incurs a Change of Control Termination. (c) CERTIFICATES. A certificate evidencing the Restricted Shares shall be issued by the Company in Executive's name, pursuant to which Executive shall have all of the rights of a shareholder of the Company with respect to the Restricted Shares, including, without limitation, voting rights and the right to receive dividends (provided, however, that dividends paid in shares of the Company's stock shall be subject to the Forfeiture Restrictions). Executive may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until the Forfeiture Restrictions have expired and a breach of the terms of this Agreement shall cause a forfeiture of the Restricted Shares. The certificate shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Committee (as such term is defined in the Plan) as a depository for safekeeping until the forfeiture of such Restricted Shares occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this award. On the date of this Agreement, Executive shall deliver to the Company a stock power, endorsed in blank, relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which Executive is a party) in the name of Executive in exchange for the certificate evidencing the Restricted Shares. (d) CORPORATE ACTS. The existence of the Restricted Shares shall not affect in any way the right or power of the Board of Directors of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. The prohibitions of Section 3(a) hereof 33 shall not apply to the transfer of Restricted Shares pursuant to a plan of reorganization of the Company, but the stock, securities or other property received in exchange therefor shall also become subject to the Forfeiture Restrictions and provisions governing the lapsing of such Forfeiture Restrictions applicable to the original Restricted Shares for all purposes of this Agreement and the certificates representing such stock, securities or other property shall be legended to show such restrictions. 4. WITHHOLDING OF TAX. To the extent that the receipt of the Restricted Shares or the lapse of any Forfeiture Restrictions results in compensation income to Executive for federal, state or foreign income tax purposes, Executive shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of money as the Company may require to meet its obligation under applicable tax laws or regulations, and, if Executive fails to do so, the Company is authorized to withhold from any cash or stock remuneration then or thereafter payable to Executive any tax required to be withheld by reason of such resulting compensation income. 5. STATUS OF STOCK. Executive agrees that the Restricted Shares issued under this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. Executive also agrees that (a) the certificates representing the Restricted Shares may bear such legend or legends as the Committee deems appropriate in order to reflect the Forfeiture Restrictions and to assure compliance with applicable securities laws, (b) the Company may refuse to register the transfer of the Restricted Shares on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable securities law, and (c) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Shares. 6. OBLIGATIONS UNDER THE EMPLOYMENT AGREEMENT. In connection with Executive's employment by the Company, the Company or an affiliate thereof shall provide Executive with access to the confidential information of the Company and its affiliates, or shall provide Executive the opportunity to develop business good will inuring to the benefit of the Company and its affiliates, or shall entrust business opportunities to Executive. Executive has agreed, and hereby agrees, as specified in more detail in the Employment Agreement and/or Executive's Invention and Non-Disclosure Agreement with the Company, to maintain the confidentiality of the Company's and its affiliates' information and to exercise the highest measures of fidelity and loyalty in the protection and preservation of the Company's and its affiliates' goodwill and business opportunities. As part of the consideration for the Restricted Shares issued to Executive hereunder; to protect the Company's and its affiliates' confidential information, the business good will of the Company and its affiliates that has been and will in the future be developed in Executive, or the business opportunities that have been and will in the future be disclosed or entrusted to Executive by the Company and its affiliates; and as an additional incentive for the Company and Executive to enter into this Agreement, the Company and Executive agree that if, during the term of Executive's employment with the Company or within a 24-month period following the date upon which Executive terminates employment with the Company, Executive fails for any reason to comply with any of the restrictive covenants set forth in Sections 7 and 8 of the Employment Agreement (as in effect on the original effective date of the Employment Agreement), then the Company shall be entitled to recover from 34 Executive, and Executive shall pay to the Company, an amount of money equal to A multiplied by B, where A equals the value (determined as of the date the Forfeiture Restrictions lapse) of the Restricted Shares with respect to which the Forfeiture Restrictions lapse during the one-year period preceding (and including) the date of Executive's termination of employment with the Company, and B equals the fraction X divided by Y, where X equals 730 minus the number of consecutive days following Executive's termination of employment with the Company during which Executive remained in compliance with the restrictive covenants set forth in Sections 7 and 8 of the Employment Agreement, and Y equals 730. If any of the restrictions set forth in this Section 6 are found by a court to be unreasonable, or overly broad in any manner, or otherwise unenforceable, the parties hereto intend for such restrictions to be modified by the court so as to be reasonable and enforceable and, as so modified, to be fully enforced. 7. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement, Executive shall be considered to be in the employment of the Company as long as Executive remains an employee of either the Company, an affiliate of the Company, a parent or subsidiary corporation (as defined in section 424 of the Internal Revenue Code of 1986, as amended) of the Company, or a successor corporation. Nothing in the adoption of the Plan, nor the award of the Restricted Shares thereunder pursuant to this Agreement, shall confer upon Executive the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, Executive's employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either Executive or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of Executive's employment with the Company, and the cause of such termination, shall be determined by the Committee, and its determination shall be final. 8. NOTICES. Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Executive, such notices or communications shall be effectively delivered if hand delivered to Executive at his principal place of employment or if sent by registered or certified mail to Executive at the last address Executive has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices. 9. ENTIRE AGREEMENT; AMENDMENT. This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between Executive and the Company and constitutes the entire agreement between Executive and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. 10. BINDING EFFECT; CONTROLLING DOCUMENT. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under 35 Executive. In the event of a conflict between the text of this Agreement and the Employment Agreement, the text of this Agreement shall control. 11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, UNITED STATES OF AMERICA, APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT GIVING EFFECT TO THE PRINCIPLE OF CONFLICTS OF LAWS. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Executive has executed this Agreement, all as of the date first above written. BMC SOFTWARE, INC. BY: _____________________________________ BOB WHILDEN SVP - GENERAL COUNSEL _________________________________________ EMPLOYEE 36 -----END PRIVACY-ENHANCED MESSAGE-----