EXHIBIT 10.54
Change of Control Agreement EXECUTIVE:
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BINDVIEW CORPORATION
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this "AGREEMENT") is made between BindView
Development Corporation, a Texas corporation (the "COMPANY"), and the
"EXECUTIVE" identified above. Unless otherwise indicated, all references to
Sections are to Sections in this Agreement. This Agreement is effective as of
the date written on the signature page ("EFFECTIVE DATE").
This Agreement is in addition to and does not diminish the rights and benefits
afforded the Executive under: (i) the Executive Employment Agreement between the
Executive and the Company ("EMPLOYMENT AGREEMENT"); (ii) any stock or stock
option agreement(s), if any ("STOCK AGREEMENT(S)"); and (iii) any incentive
bonus, benefits or other agreements, if any ("OTHER AGREEMENTS"), all as
amended, whether currently existing or entered into at a future date between the
Executive and the Company. In the case of any inconsistencies or conflict
between those agreements and this Agreement, the terms of this Agreement shall
govern.
1. BACKGROUND.
1.1 The Executive currently holds (or is being hired for) an executive
position with the Company. As a result, the Executive has (or will have)
significant responsibility for the Company's management, profitability
and growth. Likewise, the Executive possesses (or is expected to acquire)
an intimate knowledge of the Company's business and affairs, including
its policies, plans, methods, personnel, opportunities, and challenges.
1.2 The Company considers the continued employment of the Executive to be in
the best interests of the Company and its shareholders. The Company
desires to assure itself of the Executive's continued services on an
objective and impartial basis without distraction or conflict of interest
in the event of any efforts to effect a change of ownership or control of
the Company.
1.3 The Executive is willing to remain in the employ of the Company upon the
understanding that it will provide him with certain income security in
the event of a change in control of the Company, upon the terms and
conditions provided herein.
2. DEFINITIONS. For purposes of this Agreement, the following terms have the
meanings set forth below. Other defined terms have the meanings set forth
in the provisions of this Agreement in which they are used or in the
Executive Employment Agreement.
2.1 ACCOUNTING FIRM means the independent certified public accountants
selected by the Company, or another accounting firm designated by such
auditors and reasonably acceptable to the Executive; provided, however,
in no event shall such independent certified public accountants be acting
as auditors for the Company.
Change of Control Agreement EXECUTIVE:
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2.2 ACQUISITION REPORT means a report filed by or on behalf of a stockholder
or group of stockholders on Schedule 13D or Schedule 14D-1 or any
successor schedule, form or report under the Exchange Act.
2.3 BASE SALARY has the meaning set forth in the Employment Agreement.
2.4 BENEFICIAL OWNER means a Person who is a beneficial owner (as defined in
Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act), directly or indirectly, of Voting Stock, or rights to
acquire Voting Stock, or of securities convertible into Voting Stock, as
applicable. If a Person owns rights to acquire Voting Stock, that
Person's beneficial ownership shall be determined pursuant to paragraph
(d) of Rule 13d-3 or any successor rule or regulation promulgated under
the Exchange Act.
2.5 CAUSE or "for Cause" or "for cause" has the meaning set forth in the
Employment Agreement.
2.6 A CHANGE OF CONTROL shall be deemed to have occurred if any of the
following events occurs after the Effective Date:
(a) An Acquisition Report is filed with the Commission disclosing that
any Person is the Beneficial Owner of 20 percent or more of the
outstanding Voting Stock. The previous sentence shall not apply if
(1) such Person is (A) the Company, one of its subsidiaries, or any
employee benefit plan sponsored by either, or (B) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or
(2) the transaction or transactions that are the subject of such
Acquisition Report were approved by a vote of at least two-thirds of
the directors of the Company who were directors of the Company
immediately prior to the first such transaction.
(b) Any Person purchases securities pursuant to a tender offer or
exchange offer to acquire any Voting Stock (or any securities
convertible into Voting Stock) and, immediately after consummation of
that purchase, that Person is the Beneficial Owner of 20 percent or
more of the outstanding Voting Stock. The previous sentence shall not
apply if (1) such Person is (A) the Company, one of its subsidiaries,
or any employee benefit plan sponsored by either, or (B) ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, or (2) such purchase was approved by a vote of at least
two-thirds of the directors of the Company who were of the Company
immediately prior to such purchase.
(c) The consummation of a Merger Transaction if (a) the Company is not
the surviving entity or (b) as a result of the Merger Transaction, 50
percent or less of the combined voting power of the then-outstanding
securities of the other party to the Merger Transaction, immediately
after the Change of Control Date, are held in the aggregate by the
holders of Voting Stock immediately prior to the Change of Control
Date.
(d) The consummation of a Sale Transaction.
(e) The consummation of a transaction, immediately after which any Person
would be the Beneficial Owner, directly or indirectly, of more than
50 percent of the outstanding Voting Stock.
(f) The stockholders of the Company approve the dissolution of the
Company.
(g) During any period of 12 consecutive months, the individuals who at
the beginning of that period constituted the Board of
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Change of Control Agreement EXECUTIVE:
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Directors shall cease to constitute a majority of the Board of
Directors. The previous sentence will not apply if the election,
or the nomination for election by the Company's stockholders, of each
director of the Company first elected during such period was approved
by a vote of at least two-thirds of the directors of the Company then
still in office who were directors of the Company at the beginning of
any such period.
2.7 CHANGE OF CONTROL DATE means the date of an event constituting a Change
of Control. In the case of a Merger Transaction or a Sale Transaction
constituting a Change of Control, the Change of Control Date shall be the
effective date of such transaction.
2.8 CODE means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
2.9 COMMISSION means the Securities and Exchange Commission or any successor
agency.
2.10 DAY, in upper or lower case, means a calendar day unless otherwise
specified.
2.11 EMPLOYMENT AGREEMENT has the meaning set forth in the preamble of this
Agreement.
2.12 EXCHANGE ACT means the U.S. Securities Exchange Act of 1934, as amended
from time to time, or any successor statute.
2.13 EXCISE TAX - see Section 4.
2.14 EXCISE TAX APPLICABILITY DETERMINATION -- see Section 4.1.
2.15 GOOD REASON has the meaning set forth in the Employment Agreement.
2.16 IN CONNECTION WITH a Change of Control, when used in relation to a
specified event, means that the event occurs during the period beginning
30 days prior to the execution by the Company of one or more agreements
to engage in one or more transactions which, in the aggregate, constitute
a Change of Control and ending on the date one (1) year after the Change
of Control Date.
2.17 MERGER TRANSACTION means a merger, consolidation or reorganization of the
Company with or into any other person or entity.
2.18 OVERPAYMENT - see Section 4.
2.19 PAYMENT - see Section 4.
2.20 PERSON means a person within the meaning of Section 13(d) or Section
14(d)(2) or any successor rule or regulation promulgated under the
Exchange Act.
2.21 REDUCED AMOUNT - see Section 4.
2.22 SALE TRANSACTION means a sale, lease, exchange or other transfer of all
or substantially all the assets of the Company and its consolidated
subsidiaries to any other person.
2.23 SPECIAL SEVERANCE BENEFITS - see Section 3.2.
2.24 SPECIAL SEVERANCE PAYMENT - see Section 3.2.
2.25 UNDERPAYMENT - see Section 4.
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Change of Control Agreement EXECUTIVE:
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2.26 VOTING STOCK means shares of capital stock of the Company the holders of
which are entitled to vote for the election of directors, but excluding
shares entitled to so vote only upon the occurrence of a contingency
unless that contingency shall have occurred.
3. ACTIONS UPON CHANGE OF CONTROL. This Section 3 shall apply if a Change of
Control occurs.
3.1 Vesting of Stock Options / Stock Awards. Effective upon the Change of
Control Date, all unvested portions of the Executive's stock options,
restricted stock or other awards made or granted to the Executive under
any Stock Agreement shall automatically, immediately, and fully vest.
3.2 Special Severance Benefits.
(a) If, during the specific time periods listed in subparagraph (b), the
Employment is terminated by any of the specific events listed there,
then the Executive will be entitled to the following benefits
("SPECIAL SEVERANCE BENEFITS"):
(1) all benefits, if any, that would be provided under the Employment
Agreement in the event of a termination of the Employment without
Cause by the Company, with any Severance Payment required by the
Employment Agreement being paid as provided in subparagraph (c)
below instead of as provided in the Employment Agreement;
(2) a special severance payment ("SPECIAL SEVERANCE PAYMENT") equal
to one-half (1/2) of the Executive's [annual] Base Salary;
(3) the insurance-related benefits required by the Employment
Agreement, if any, to be provided by the Company in the event of
a termination without Cause, for an additional six (6) months
after the end of the time that such benefits are required to be
provided under the Employment Agreement; and
(4) from and after the Termination Date until 5 pm Houston time on
the date one (1) year after the Termination Date, the Executive
will be entitled to exercise any vested, unexpired, and
previously-unexercised options to purchase the Company's stock.
(b) The specific termination events and time periods in which the
Executive will be entitled to the Special Severance Benefits are as
follows:
(1) the Executive's Employment is terminated by the Company, for any
reason other than Cause, In Connection With a Change of Control;
(2) the Executive Resigns for Good Reason In Connection With a Change
of Control;
(3) after a Change of Control, the Executive dies, while still
employed by the Company, at any time during the period beginning
on the Change of Control Date and ending at 5 pm Houston time on
the date one (1) year after the Change of Control Date.
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Change of Control Agreement EXECUTIVE:
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(c) The Special Severance Payment and the Severance Payment required by
the Employment Agreement, if any, shall be made to the Executive, in
cash or immediately-available funds, in a lump sum within 30 days
following the Termination Date, notwithstanding the provisions of the
Employment Agreement for payment of the Severance Payment in
installments.
(d) Payments pursuant to this Agreement shall not be deemed to constitute
continued employment beyond the Termination Date.
(e) As a condition to providing the Executive with the Special Severance
Benefits, the Company, in its sole discretion, may require the
Executive to first execute a release in the form prescribed by the
Employment Agreement.
4. CERTAIN REDUCTIONS OF PAYMENTS. The provisions of this Section 4 shall
apply, anything in this Agreement to the contrary notwithstanding, in the
event that a determination is made that any payment or distribution by
the Company to or for the benefit of the Executive (or portion thereof),
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (a "PAYMENT"), would be (i) subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to
as the "EXCISE TAX") and/or (ii) nondeductible to the Company. Such
determination by the Accounting Firm is referred to as an "EXCISE TAX
APPLICABILITY DETERMINATION."
4.1 Determination of Excise Tax Applicability. Subject to the provisions of
this Section 4, all determinations required to be made hereunder shall be
made by the Accounting Firm, at the sole expense of the Company. The
Accounting Firm shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the Termination
Date or such earlier time as is requested by the Company. If the
Accounting Firm determines that no Excise Tax is payable by the
Executive, the Accounting Firm shall furnish the Executive with an
opinion that he has substantial authority not to report any Excise Tax on
his federal income tax return. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive for purposes of this
Section 4.
4.2 Reduction of Payments: If the Accounting Firm makes an Excise Tax
Applicability Determination, then the aggregate present value of all
Payments shall be reduced to an amount expressed in present value which
maximizes the aggregate present value of the Payments without causing
either (i) an Excise Tax to be due on any Payment or portion thereof, or
(ii) any Payment or portion thereof to be nondeductible to the Company.
(a) The Executive shall determine which and how much of the Payments
shall be eliminated or reduced consistent with the requirements of
this Section 4.2. If, however, the Executive does not make such
determination within ten business days of the receipt of supporting
calculations made by the Accounting Firm pursuant to Section 4.1,
then the Company shall elect which and how much of the Payments shall
be eliminated or reduced consistent with the requirements of this
Section 4.2 and shall notify the Executive promptly of such election.
Within five business days thereafter, the Company shall pay to or
distribute to or for the benefit of the Executive such amounts as are
then due to the Executive hereunder.
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Change of Control Agreement EXECUTIVE:
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(b) As a result of possible uncertainty in the application of the
relevant provisions of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Payments will have been made by the Company which should not have
been made ("OVERPAYMENT") or that additional Payments which will not
have been made by the Company could have been made ("Underpayment"),
in each case, consistent with the calculations required to be made
hereunder.
(1) (A) In the event that the Accounting Firm, based upon the
assertion of a deficiency by the Internal Revenue Service against
the Executive which the Accounting Firm believes has a high
probability of success, determines that an Overpayment has been
made, then any such Overpayment shall be treated for all purposes
as a loan ab initio to the Executive. The Executive shall repay
such loan to the Company together with interest at the applicable
federal rate provided for in Section 1274(d) of the Code. (B) No
such loan shall be deemed to have been made, however, and no
amount shall be payable by the Executive to the Company, if and
to the extent that such deemed loan and payment would not either
(i) reduce the amount on which the Executive is subject to tax
under Section 1 and Section 4999 of the Code, or (ii) generate a
refund of such taxes.
(2) If the Accounting Firm, based upon controlling precedent or other
substantial authority, determines that an Underpayment has
occurred, then any such Underpayment shall be promptly paid by
the Company to or for the benefit of the Executive together with
interest at the applicable federal rate provided for in Section
1274(d) of the Code.
5. NO MITIGATION. The Executive shall not be required to mitigate the amount
of any payment which is payable by the Company to the Executive
hereunder. Any remuneration received by the Executive from a third party
following termination of the Employment shall not apply to reduce the
Company's obligations to make payments hereunder.
6. SUCCESSORS. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement. By way of example and not
of limitation, any breach of the Company's obligations in the previous
sentence shall constitute a material breach of this Agreement. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successors or assigns to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law,
or otherwise.
7. EFFECT OF AGREEMENT ON OTHER RIGHTS.
7.1 This Agreement shall not diminish other rights which the Executive (or
his estate, survivors or heirs) may have under any other agreement,
contract, employee benefit plan or policy of the Company except as
expressly provided in this Agreement.
7.2 Nothing in this Agreement shall be deemed (i) to constitute an employment
contract, express or implied, nor (ii) to impose any obligation on the
Company or any affiliate thereof to employ the Executive at all or on any
particular terms, nor (iv) to impose any obligation on the Executive to
work
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Change of Control Agreement EXECUTIVE:
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for the Company or any affiliate thereof, nor (v) to limit the right of
the Company to terminate the Executive's employment for any reason, with
or without cause, nor (vi) to limit the Executive's right to resign from
Employment.
8. ARBITRATION. Any dispute arising out of or relating to this Agreement or
its validity, enforceability, or breach will be arbitrated in accordance
with the arbitration provisions of the Employment Agreement.
9. OTHER PROVISIONS.
9.1 This Agreement shall inure to the benefit of and be binding upon (i) the
Company and its successors and assigns and (ii) the Executive and the
Executive's heirs and legal representatives.
9.2 All notices and statements with respect to this Agreement shall be made
or delivered as set forth in the Employment Agreement.
9.3 If the Executive Resigns for Good Reason because of (i) the Company's
failure to pay the Executive on a timely basis the amounts to which he is
entitled under this Agreement or (ii) any other breach of this Agreement
by Company, then the Company shall pay all amounts and damages to which
the Executive may be entitled as a result of such failure or breach,
including interest thereon at the maximum non-usurious rate and all
reasonable legal fees and expenses and other costs incurred by the
Executive to enforce the Executive's rights hereunder.
9.4 This Agreement sets forth the entire present agreement of the parties
concerning the subjects covered herein; there are no promises,
understandings, representations, or warranties of any kind concerning
those subjects except as expressly set forth in this Agreement.
9.5 Any modification of this Agreement must be in writing and signed by all
parties; any attempt to modify this Agreement, orally or in writing, not
executed by all parties will be void.
9.6 If any provision of this Agreement, or its application to anyone or under
any circumstances, is adjudicated to be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability will not affect any
other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application and
will not invalidate or render unenforceable such provision or application
in any other jurisdiction.
9.7 This Agreement will be governed and interpreted under the laws of the
United States of America and of the State of Texas law as applied to
contracts made and carried out in entirely Texas by residents of that
State.
9.8 No failure on the part of any party to enforce any provisions of this
Agreement will act as a waiver of the right to enforce that provision.
9.9 Termination of the Employment, with or without Cause, will not affect the
continued enforceability of this Agreement.
9.10 Section headings are for convenience only and shall not define or limit
the provisions of this Agreement.
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Change of Control Agreement EXECUTIVE:
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9.11 This Agreement may be executed in several counterparts, each of which is
an original. It shall not be necessary in making proof of this Agreement
or any counterpart hereof to produce or account for any of the other
counterparts. A copy of this Agreement manually signed by one party and
transmitted to the other party by FAX or in image form via email shall be
deemed to have been executed and delivered by the signing party as though
an original. A photocopy of this Agreement shall be effective as an
original for all purposes.
THIS AGREEMENT CONTAINS PROVISIONS REQUIRING BINDING ARBITRATION OF DISPUTES,
WHICH HAVE THE EFFECT OF WAIVING EACH PARTY'S RIGHT TO A JURY TRIAL. By signing
this Agreement, the Executive acknowledges that the Executive (1) has read and
understood the entire Agreement; (2) has received a copy of it (3) has had the
opportunity to ask questions and consult counsel or other advisors about its
terms; and (4) agrees to be bound by it. Executed to be effective as of December
30, 2002 (the "EFFECTIVE DATE").
BINDVIEW CORPORATION, BY: EXECUTIVE:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President Signature
and Chief Executive Officer
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