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EXHIBIT 10.4
EXECUTIVE: XXXXXX X. XXXXXX
BINDVIEW CORPORATION
CHANGE OF CONTROL AGREEMENT
THIS CHANGE OF CONTROL AGREEMENT (this "AGREEMENT") is made between BindView
Corporation, a Texas corporation (the "COMPANY"),(1) 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 executed
by the Executive as written on the signature page ("EFFECTIVE DATE"). This
Agreement modifies the Executive Employment Agreement ("EMPLOYMENT AGREEMENT"),
the Restricted Stock Agreement ("STOCK AGREEMENT"), and the Promissory Note in
the amount of $1,044,000.00 ("PROMISSORY NOTE"), each of even date herewith,
between the Executive and the Company. The terms and conditions of this
Agreement shall take precedence over any inconsistent provisions in those
agreements, which otherwise remain in full force and effect in accordance with
their respective terms and conditions.
1. BACKGROUND.
1.1 The Executive currently holds (or is being hired for) a senior
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 and 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.
2.1 ACCOUNTANTS means the independent accountants acting as auditors for
the Company, or another accounting firm designated by such auditors and
reasonably acceptable to the Executive.
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 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, of rights to
acquire Voting Stock, or of securities convertible into Voting Stock,
as applicable.
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(1) "BindView Corporation" is a registered assumed name of BindView Development
Corporation.
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EXECUTIVE: XXXXXX X. XXXXXX
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.
2.4 A CHANGE IN CONTROL of the Company 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 such Person is (1) the Company, one of its
subsidiaries, or any employee benefit plan sponsored by
either, or (2) Xxxx X. Xxxxxxx.
(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 such Person is (1)
the Company, one of its subsidiaries, or any employee benefit
plan sponsored by either, or (2) Xxxx X. Xxxxxxx.
(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 if as a result of the
Sale Transaction, 50 percent or less of the combined voting
power of the then-outstanding securities of the other party to
the Sale 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.
(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
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.
2.5 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.
2.6 COMMISSION means the Securities and Exchange Commission or any
successor agency.
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EXECUTIVE: XXXXXX X. XXXXXX
2.7 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, or any successor statute.
2.8 GOOD REASON has the meaning set forth in the Employment Agreement,
supplemented to include as an event of Good Reason (in addition to
those listed in the Employment Agreement), a Change of Control which
results in the Executive's position with the Company no longer being
that of a chief financial officer of a publicly-owned company.
2.9 GROSS-UP PAYMENT - see Section 5.1.
2.10 IN CONNECTION WITH a Change of Control, as to an event in Schedule A of
this Agreement, means that the event occurs either (a) within one year
after the effective date of a Change of Control, or (b) within the
30-day period before 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.
2.11 MERGER TRANSACTION means a merger, consolidation or reorganization of
the Company with or into any other person or entity.
2.12 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.
2.13 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.
2.14 SCHEDULE A means Schedule A set forth at the end of this Agreement
above the parties' signatures.
2.15 SECTION 280G means Section 280G of the Internal Revenue Code of 1986,
as amended, and any regulations promulgated by the Internal Revenue
Service thereunder, and any successor statutory or regulatory
provision.
2.16 TAX RATE means the Executive's effective tax rate based upon the
combined federal and state and local income, earnings, Medicare and any
other tax rates applicable to the Executive, all at the highest
marginal rate of taxation in the country and state of the Executive's
residence on the date of determination, net of the reduction in federal
income taxes which could be obtained by deduction of such state and
local taxes.
2.17 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. If (i) a Change of Control occurs, and
(ii) an event listed in Schedule A also occurs (but in no other event),
then the following shall occur.
3.1 To the extent expressly provided in Schedule A, and subject to all
terms and conditions of the Employment Agreement concerning Severance
Benefits, the Executive shall be entitled to the following as
additional Severance Benefits under the Employment Agreement:
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EXECUTIVE: XXXXXX X. XXXXXX
(a) the vesting of any portion of the Executive's stock award
under the Stock Agreement that remains unvested as of the
effective date of the Change of Control shall be accelerated
as provided in Schedule A, as of such effective date; and
(b) the Executive will be entitled to a Severance Period as
provided in Schedule A in lieu of any other Severance Period
under the Employment Agreement.
3.2 The Executive will not be entitled to any other compensation or
benefits as a result of, relating to, or in connection with a Change of
Control unless expressly provided in a written agreement executed by
the Executive and by an authorized officer of the Company.
4. OTHER ACTIONS. If (i) a Change of Control occurs, and (ii) an event
listed in Schedule A also occurs, then:
5. EXCESS PARACHUTE PAYMENTS. It is the intention of the parties that
Severance Benefits, if any, shall not constitute "excess parachute
payments" within the meaning of Section 280G. Accordingly:
5.1 If the Accountants determine that any portion(s) of the Severance
Benefits constitute "excess parachute payments" for which an excise tax
must be paid under the Internal Revenue Code of 1986, as amended, then
the Company shall pay the Executive an additional amount ("Gross-Up
Payment") so that the net amount retained by the Executive, after
deduction of any excise tax based on such excess parachute payments and
of all income taxes, Social Security taxes, and Medicaid taxes of any
kind on the Gross-Up Payment, equals the amount that the Executive
would have received had no excise tax been imposed.
5.2 The Gross-Up Payment shall be paid no later than the earlier of (a) the
date such excise tax is withheld from payments made to the Executive,
or (b) the date such excise tax becomes due and payable by the
Executive.
5.3 For purposes of making any determination required by this Section 5,
the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Section 280G and/or other
applicable law. The Company and the Executive shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make such determination. The Company
shall bear all fees and costs the Accountants may reasonably charge in
connection with any such determination.
5.4 Any determination by the Accountants under this Section 5 shall be
binding on both the Company and the Executive.
5.5 For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay taxes at the Executive's Tax Rate
applicable at the time of the Gross-Up Payment.
5.6 If the excise tax is subsequently determined to be less than the amount
taken into account hereunder at the time an excess parachute payment is
made, then the Executive shall repay to the Company,
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EXECUTIVE: XXXXXX X. XXXXXX
promptly following the date that the amount of such reduction in excise
tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction (without interest).
5.7 In the event that the excise tax is determined to exceed the amount
taken into account hereunder at the time an excess parachute payment is
made (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), then
the Gross-Up Payment will be increased by the amount of such excess
(plus any interest or penalties payable in respect of such excess) at
the time that the amount of such excess is finally determined, and the
Company will pay the amount of the increase to the Executive.
5.8 The Company shall reimburse the Executive for (a) all reasonable fees,
expenses, and costs related to determining the reasonableness of any
Company position in connection with this paragraph and preparation of
any tax return or other filing that is affected by any matter addressed
in this paragraph, (b) any audit, litigation or other proceeding that
is affected by any matter addressed in this Section and (c) an amount
equal to the tax on such amounts at the Executive's Tax Rate.
6. SUCCESSORS. The Company will 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 in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor 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 or enhance other rights which the
Executive (or his estate, survivors or heirs) may have under any other
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 (iii) to amend any
other agreement between the Executive and the Company or any affiliate
thereof; nor (iv) to impose any obligation on the Executive to work 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. The section of the Employment Agreement entitled
"Other Provisions" is hereby incorporated by reference into this
Agreement.
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EXECUTIVE: XXXXXX X. XXXXXX
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SCHEDULE A
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EVENT ACCELERATED VESTING? SEVERANCE PERIOD?
(see Section 3)
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The Executive resigns, In Connection With a Change 100% of all unvested 1 year after the date of
of Control, for Good Reason [1] shares [2] delivery of the Executive's
notice of resignation
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1 year after the effective
date of termination of the
The Company terminates the Executive's employment, Executive's employment set
In Connection With a Change of Control, for any 100% of all unvested forth in the Company's notice
reason other than for Cause or Disability [1] shares [2] of termination
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[1] The terms "Cause" and "Disability" have the meanings set forth in the
Employment Agreement.
[2] In the event of such accelerated vesting, the Promissory Note will become
immediately due and payable in full.
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 and effective May 1, 2001.
BINDVIEW CORPORATION, BY: EXECUTIVE
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Xxxxxxx X. Xxxxxxx, President Xxxxxx X. Xxxxxx
and Chief Executive Officer
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