EXECUTIVE EMPLOYMENT
AGREEMENT
This Employment
Agreement (this “Agreement”) is made as of
August 29, 2005 (the “Effective Date”), by and
between BMC Software, Inc., a Delaware corporation (the
“Employer”), and Stephen B. Solcher (the
“Executive”). The Employer and the Executive are each a
“party” and are together “parties” to this
Agreement.
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.
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:
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:
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a.
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trade secrets (as defined herein)
concerning the business and affairs of the Employer, product
specifications, data, know-how, formulae, compositions, processes,
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,
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improvements,
devices, know-how, inventions, discoveries, concepts, ideas,
designs, methods and information), and any other information,
however documented, that is a trade secret;
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b.
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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
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c.
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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.
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“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, or governmental body.
“Proprietary Items” as defined in
Section 7.2(a)(iv).
“Salary” as defined in
Section 3.1(a).
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“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
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.
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.
The Executive will
have such duties as are assigned or delegated to the Executive by
the Board of Directors, and will initially serve as the
Employer’s Vice President —Finance and its interim
Chief Financial Officer. 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 Board of Directors 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 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.
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a.
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Salary . During the Employment Period, the
Executive will be paid an annual base salary of $300,000 (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.
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b.
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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”).
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c.
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Cash Bonus . Executive will be eligible for a
cash bonus based as described in Attachment A incorporated herein
by reference.
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d.
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Restricted Stock
. The Executive will,
upon execution of this Agreement, be entitled to receive 25,000
shares of restricted stock of the Employer, vesting 12,500 shares
after one year and the remaining 12,500 shares after two
years.
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e.
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Additional Bonus
Opportunity .
Executive will be eligible for $100,000 fiscal 2006 bonus based on
achievement of certain personal objectives set by the CEO of
Employer, and Executive will be eligible for an additional bonus
opportunity totaling $50,000 based on achievement of the
Employer’s earnings per share (EPS) targets for its
third and fourth quarters of fiscal 2006.
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4.
FACILITIES AND EXPENSES
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.
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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.
6.1 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):
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a.
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upon the death of the
Executive;
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b.
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upon the Disability (as defined in
Section 6.2) of the Executive immediately upon notice from
either party to the other;
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c.
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upon termination by the Employer for
cause (as defined in Section 6.3);
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d.
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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;
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e.
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upon termination by the Employer for
any reason other than those set forth in Section 6.1(a)
through 6.1(d) above; or
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f.
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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.
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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.
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”
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a.
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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.
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b.
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“Good Reason”
means:
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i.
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The
occurrence, prior to a Change of Control or on 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) Executive no longer being, at a
minimum, Vice President — Finance with substantially similar
responsibilities held by Executive immediately prior to the date of
this Agreement (but not an alteration in Executive’s
reporting responsibilities nor the removal from Executive of
the Chief Financial Officer title and responsibilities);
(ii) a reduction in the Executive’s Salary or target
bonus amount 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 Paragraph 7(a)) or as the same may
be increased from time to time; or (iii) a diminution
in
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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, as
such benefits may be modified from time to time; or
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ii.
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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 reduction by the Employer or a subsidiary thereof in
Executive’s Salary or bonus target amount 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.
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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:
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a.
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a
payment equal to one and one-half (1.5) years of his then current
Salary; and
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b.
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a
payment equal to one and one-half (1.5) times his then current cash
bonus target amount.
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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.
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:
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a.
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a
payment equal to one and one-half (1.5) years of his then current
Salary;
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b.
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a
payment equal to one and one-half (1.5) times his then current cash
bonus target amount;
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c.
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vesting of Executive’s stock
option awards, subject to the terms and conditions of the
respective stock option agreements;
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d.
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vesting of Executive’s
restricted stock award pursuant to Section 3.1 (e) above,
subject to the terms and conditions of the Restricted Stock
Agreement; and
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e.
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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.
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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 Revenu
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