Exhibit 10.73
EMPLOYMENT
AGREEMENT
This Employment Agreement is entered
into as of November 1, 2005, by and between Borland Software
Corporation, a Delaware corporation (the “Company”),
and Tod Nielsen (the “Executive”).
WHEREAS, the Executive and the
Company wish to enter into this employment agreement to govern the
terms of the Executive’s employment relationship with the
Company;
NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual covenants and agreements set
forth below, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Duties and Scope of
Employment .
a. Positions; Duties . The
Executive will be employed by the Company as its President and
Chief Executive Officer, reporting solely and directly to the
Company’s Board of Directors (the “Board”). All
other employees of the Company will report to the Executive or his
designee and not directly to the Board, subject to any regulatory
or other legal requirements. During the Employment Term (as defined
below), the Executive will have such responsibilities, duties and
authorities as commensurate with chief executive officers of public
entities of similar size and, in particular, will be, in addition
to being responsible for the operations of the Company, the chief
external representative of the Company.
b. Board Membership . At each
annual meeting of the Company’s stockholders during the
Employment Term, the Company and the Board will nominate Executive
to serve as a member of the Board. Executive’s service as a
member of the Board will be subject to any required stockholder
approval.
c. Obligations . During the
Employment Term, the Executive will devote his full business
efforts and time to the Company and will not engage in any activity
that will create any conflict in interest between himself and the
Company. For the duration of the Employment Term, Executive agrees
not to actively engage in any other employment, occupation, or
consulting activity for any direct or indirect remuneration without
the prior approval of the Board (which approval will not be
unreasonably withheld); provided, however, that the Executive may,
without the approval of the Board, serve in any capacity with any
civic, educational, or charitable organization, provided such
services do not interfere with Executive’s obligations to
Company.
2. At-Will Employment . The
Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment. The
Executive and the Company acknowledge that this employment
relationship may be terminated at any time, upon written notice to
the other party, with or without good cause or for any or no cause,
at the option either of the Company or the Executive. However, as
described in this Agreement, the Executive may be entitled to
severance benefits depending upon the circumstances of
Executive’s termination of employment. The Executive agrees
to resign from his position as a member of the Board immediately
following the termination of his employment if the Board so
requests.
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3. Term of Employment . The
Executive’s employment will begin as soon as possible as
agreed to by the parties but no later than November 28, 2005
(the “Effective Date”). The Executive’s start
date is contingent upon successful completion of a background check
(for undisclosed criminal record or civil action). In addition, as
a condition of the Executive’s employment, he will be
required to provide the Company with documents establishing his
identity and right to work in the United States. Those documents
must be provided to the Company within three (3) business days
after the Effective Date. The Executive’s employment with the
Company will continue until the earliest of (a) the
Executive’s death, (b) the termination of the
Executive’s employment by the Company for Cause (as defined
below), (c) the termination of the Executive’s
employment by the Executive by reason of a Constructive Termination
(as defined below), or (d) the time either party will have
given notice to the other that this Agreement will terminate for
any reason other than enumerated above (such period of employment,
the “Employment Term”). Upon the termination of the
Executive’s employment with the Company, for any reason,
neither the Executive nor the Company will have any further
obligation or liability under this Agreement to the other, except
as set forth in paragraphs 4 through 22 below.
4. Compensation . The
Executive will be compensated by the Company for his services as
follows:
a. Annual Salary . During the
Employment Term, the Company will pay the Executive an Annual
Salary at a rate of $600,000 per annum (such annual salary, as in
effect to be referred to herein as the “Annual
Salary”), in accordance with the Company’s policy
applicable to senior executives. The Compensation Committee of the
Board (the “Compensation Committee”) will review the
Executive’s Annual Salary from time to time and may increase
the Annual Salary in its sole discretion.
b. Incentive Compensation
Bonus. During the Employment Term, the Executive will be
entitled to a bonus (the “Bonus”) pursuant to the
Company’s Incentive Compensation Plan for senior management
(the “ICP”). The Bonus will range between 0% and 150%
of the Executive’s Annual Salary based on the achievement of
both corporate performance objectives and personal performance
objectives, with 100% being the Bonus for on target performance.
The targets at each plan level will be determined jointly between
the Executive, the Compensation Committee, and the Board. Except as
otherwise specified in this Agreement, the Executive will not be
entitled to any other Company bonus or incentive compensation
payments.
c. Signing Bonus . Prior to
the end of 2005, the Executive will receive a signing bonus of
$1,000,000 to defray the increased cost of living in the San
Francisco Bay Area; provided, however, that the Executive will be
required to forfeit this payment if he does not relocate his
principal place of residency by June 1, 2006.
d. Discretionary Executive
Bonus . At the discretion of the Compensation Committee, the
Executive may be entitled to a discretionary bonus payment based on
the Company’s recommendation.
e. Restricted Share Units .
The Executive will receive a grant of 250,000 units of restricted
ordinary shares of the Company (“Restricted Share
Units”). All of the Restricted
Share Units will vest based upon the performance
of the Company with the standards of performance to be determined
by the Board and the Executive. The Restricted Share Units will be
subject to the terms and conditions of the plan document and
standard form of Restricted Share Unit agreement.
f. Stock Options . The
Company will grant to the Executive an initial option grant to
purchase 1,500,000 ordinary shares of the Company (the
“Option”). The Option will be granted no later than the
Effective Date, with an exercise price equal to the fair market
value of the underlying shares of the Company as of the grant date.
The Option will be subject to the terms and conditions of the
Company’s 2003 Stock Incentive Plan (the “Stock
Plan”) and to the standard form of option agreement to be
executed by the Executive and the Company. The Option will vest
with respect to 1/4 th of the shares upon the first
anniversary of the Effective Date and 1/36 th of the remaining shares subject to
the Option will vest each month thereafter, subject to the
Executive’s continued employment with the Company and
otherwise remaining eligible under the Stock Plan on each relevant
vesting date. Following any termination of Executive’s
employment for any reason, Executive shall have twelve
(12) additional months from the otherwise applicable
expiration date pursuant to the Stock Plan to exercise any vested
options, but in no case longer than the applicable term of the
option grant.
g. Relocation Benefits . In
consideration of the Executive’s relocation of his principal
residence to enter into this Agreement, prior to the end of 2005,
the Company will provide the Executive with a one-time bonus of
$50,000, increased to assist with any applicable federal or state
taxes on such bonus, to cover incidental relocation costs. The
Company will also reimburse the Executive for reasonable moving
expenses associated with moving his household goods to California.
In addition, the Company will reimburse the Executive for
reasonable, temporary housing costs for a period of up to six
(6) months. Further, the Company will reimburse the Executive
for reasonable travel expenses for visits with his immediate family
until they have relocated to California. The Company will reimburse
the Executive for transaction costs related to the sale of his
current principal residence and the purchase of a new home in the
San Francisco Bay Area; provided , however , such
transaction costs will not include points to “buy-down”
the cost of a mortgage.
h. Benefits . The Executive
will have the right, on the same basis as other members of senior
management of the Company, to participate in and to receive
benefits under any of the Company’s employee benefit plans,
as such plans may be modified from time to time. In addition, the
Executive will be entitled to the benefits afforded to other
members of senior management under the Company’s vacation,
holiday and business expense reimbursement policies.
5. Benefits upon Termination by
Company .
a. Prior to a Change of Control (as
defined below), if the Executive’s employment with the
Company is terminated by the Company for Cause, the Executive will
only be entitled to receive any earned but unpaid Annual Salary,
bonuses and unreimbursed expenses through the date of termination,
and no other payments or benefits will be made or provided to the
Executive or his estate hereunder.
b. If the Executive’s
employment with the Company is terminated by the Company in
connection with or by reason of a Change of Control, Executive
shall be entitled to the benefits set forth in
Section 7.
c. Prior to a Change of Control (as
defined below) if the Executive’s employment is terminated by
the Company for any reason other than for Cause, then, in lieu of
any other payments or benefits hereunder, the Executive (or his
estate) will receive (i) any earned but unpaid Annual Salary,
bonuses and unreimbursed expenses through the date of termination
and (ii) subject to Section 9 hereof, a cash lump sum
equal to the Annual Salary then in effect for him (such amount will
be calculated without regard to any reduction to Annual Salary made
in breach of this Agreement). Subject to Section 9, amounts
payable pursuant to this Section 5 will be paid to the
Executive, or his estate, as the case may be, within the prescribed
Code Section 409A time period.
d. For purposes of this Agreement,
“Cause” means (i) the Executive’s willful
and continued failure to perform the duties and responsibilities of
his position that is not corrected within a thirty (30) day
correction period that begins upon delivery to the Executive of a
written demand for performance from the Board that describes the
basis for the Board’s belief that Executive has not
substantially performed his duties; (ii) any act of personal
dishonesty taken by the Executive in connection with his
responsibilities as an employee of the Company with the intention
that such may result in substantial personal enrichment of the
Executive; (iii) the Executive’s conviction of, or plea
of nolo contendre to, a felony that the Board reasonably believes
has had or will have a material detrimental effect on the
Company’s reputation or business, or (iv) the Executive
materially breaching the Executive’s Employee Confidentiality
and Assignment of Inventions Agreement, which breach is (if capable
of cure) not cured within thirty (30) days after the Company
delivers written notice to the Executive of the breach.
6. Benefits upon Termination by
Executive .
a. If the Executive’s
employment with the Company is terminated by the Executive other
than by reason of a Change of Control, the Executive will only be
entitled to receive any earned but unpaid Annual Salary or
unreimbursed expenses through the date of termination, and no other
payments or benefits will be made or provided to the Executive
hereunder.
b. If the Executive’s
employment with the Company is terminated by the Executive in
connection with or by reason of a Change of Control, Executive
shall be entitled to the benefits set forth in
Section 7.
c. If prior to a Change in Control,
if the Executive’s employment with the Company is terminated
by the Executive by reason of a Constructive Termination, then, in
lieu of any other payments or benefits hereunder, the Executive (or
his estate) will receive (i) any earned but unpaid Annual
Salary, bonuses and unreimbursed expenses through the date of
termination and (ii) subject to Section 9 hereof, a cash
lump sum equal to the Annual Salary then in effect for him (such
amount will be calculated without regard to any reduction to Annual
Salary made in breach of this Agreement or which results in a
Constructive Termination occurring) and Subject to Section 9,
amounts payable pursuant to this Section 6 will be paid to the
Executive, or his estate, as the case may be, within the prescribed
Code Section 409A time period.
d. For purposes of this Agreement, a
“Constructive Termination” will occur if any of the
following events occurs without the Executive’s prior written
consent:
(i) any significant reduction or
diminution (except temporarily during any period of disability) in
Executive’s titles or positions or any material diminution in
Executive’s authority, duties or responsibilities with the
Company which is made without the Executive’s
consent;
(ii) any material breach of this
Agreement by the Company, which breach, if curable, is not cured
within thirty (30) days following written notice of such
breach from the Executive; or
(iii) the failure to nominate the
Executive to the Board at any time hereafter or the removal of
Executive there from.
7. Benefits upon a Change in
Control .
a. In the event there is a
“Change in Control” (as defined herein) of the Company
during the Employment Term and within two (2) months prior or
twelve (12) months after the effective date of such Change in
Control, the Executive ceases to be the President and Chief
Executive Officer of the new successor entity, a Constructive
Termination otherwise occurs, or the Executive is terminated
without Cause, then, subject to Section 9 hereof, the
Executive will receive (i) a cash lump sum equal to the Annual
Salary and bonuses (in an amount no less than the average for the
last two years or the ICP target, whichever is higher) for a period
of twelve (12) months following the termination date;
(ii) accelerated vesting as of the termination date of 100% of
the Executive’s then unvested and outstanding Option and
Restricted Share Units granted pursuant to this Agreement; and
(iii) accelerated vesting as of the termination date of 100%
of any other unvested and outstanding equity awards granted to the
Executive’s, if any, as long as such equity awards are
granted at any time six (6) months prior to the effective date
of the Change in Control (as such effective date is defined in a
Letter of Intent to sell or merger the Company).
b. For purposes of this Agreement,
“Change of Control” will have the same meaning as
defined in the stock option agreement for the Stock Plan (as may be
amended to comply with the provisions of the proposed regulations
under Internal Revenue Code Section 409A).
8. Compliance with Code
Section 409A .
a. Notwithstanding anything to the
contrary in this Agreement, any severance payments herein will not
be paid during the six (6) month period following the
Executive’s termination of employment unless the Company
determines, in its good faith judgment, that paying such amounts
before the six (6) month period would not cause the Executive
to incur an additional tax under Internal Revenue Code
Section 409A. The payment of any amounts as a result of the
previous sentence, shall become payable in a lump sum payment on
the date six (6) months and one (1) day following the
date of the Execeutive’s termination.
b. Notwithstanding anything to the
contrary in this Agreement, in the event that the Internal Revenue
Service determines that any aspect of this Agreement results in
deferred compensation for the Executive under Code
Section 409A, the Company will possess no responsibility for
or liability for any payment of any additional tax or penalties
imposed on the Executive by the Internal Revenue Service, other
than the Company’s standard withholding
obligations.
9. Release Agreement . In the
event of the Executive’s termination of employment with the
Company under circumstances in which the Executive is entitled to a
severance payment (i.e., a payment in addition to any earned but
unpaid Annual Salary, Bonus or unreimbursed expenses), the parties
will execute a mutual release substantially in the form attached
hereto as Attachment A. Execution of such release by the Executive
and expiration of the revocation period referred to therein will be
a condition to the Executive’s receipt of any
severance
