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EXHIBIT 10.4
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the ______ day of ____________, _____, between
BMC SOFTWARE, INC., a Delaware corporation (the "Company"), and
__________________ ("Employee").
To carry out the purposes of the BMC SOFTWARE, INC. 1994 EMPLOYEE
INCENTIVE PLAN (the "Plan"), by affording Employee the opportunity to purchase
shares of common stock of the Company ("Stock"), and in consideration of the
mutual agreements and other matters set forth herein and in the Plan, the
Company and Employee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of _________ 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, which
has been determined to be not less than the fair market value of the Stock at
the date of grant of this Option. 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 to
the Company at its principal executive office addressed to the attention of the
President, at any time and from time to time after the date which is six months
from the date of grant hereof (unless earlier exercise is permitted pursuant to
Paragraph IX(c) of the Plan), but, except as otherwise provided below and in
Paragraph IX(c) of the Plan, 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
DATE THAT MAY BE PURCHASED
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Notwithstanding anything in this agreement to the contrary, (i) the Committee
appointed by the Board of Directors of the Company to administer the Plan (the
"Committee") may, in its sole discretion, waive the foregoing schedule of
vesting and permit Employee to exercise the Option in such amount or amounts
and at such time or times as the Committee shall determine and (ii) if a
Corporate Change (as such term is defined in Paragraph IX(c) of the Plan) shall
occur, then, effective as of the earlier of (1) the date of approval by the
stockholders of the Company of the event or transaction constituting such
Corporate Change or (2) the date of such Corporate Change, this Option shall be
exercisable in full.
This Option may be exercised only while Employee remains an employee
of the Company and will terminate and cease to be exercisable upon Employee's
termination of employment with the Company, except that:
(a) If Employee dies while in the employ of the Company,
Employee'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 Employee, may exercise this Option at any time during the
period of one year following the date of Employee's death as follows:
(i) if Employee shall have attained age 65 at the
time of his death, then this Option may be exercised in full;
or
(ii) if Employee shall not have attained age 65 at
the time of his death, then this Option may be exercised only
as to the number of shares Employee was entitled to purchase
hereunder upon exercise of this Option as of the date of
Employee's death.
(b) If Employee's employment with the Company terminates
for any reason other than as described in (a) above, unless Employee
voluntarily terminates without the prior written consent of the
Company or is terminated for cause, this Option may be exercised by
Employee at any time during the period of three months following such
termination, or by Employee'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 Employee) during a period of one year following
Employee's death if Employee dies during such three-month period, but
in each case only as to the number of shares Employee was entitled to
purchase hereunder upon exercise of this Option as of the date
Employee's employment so terminates. For purposes of this Agreement,
"cause" shall mean Employee's gross negligence or willful misconduct
in performance of the duties of Employee's employment, or Employee's
final conviction of a felony or of a misdemeanor involving moral
turpitude.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. 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 (a) in cash (including check, bank
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draft or money order payable to the order of the Company), or, if acceptable to
the Company, (b) by delivering to the Company shares of Stock having a fair
market value equal to the purchase price, or (c) any combination of cash or
Stock. 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, Employee 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 Employee, Employee (or the person
permitted to exercise this Option in the event of Employee's death) shall not
be or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.
4. CASHLESS EXERCISE. Employee (or the person permitted to
exercise this Option in the event of Employee's death) may direct, in a
properly executed written notice, an immediate market sale or margin loan
respecting all or any part of the shares of Stock to which he is entitled upon
exercise of this Option pursuant to an extension of credit by the Company, on
an interest-free basis, to the Employee of the purchase price. In such event,
the Company shall deliver the specified number of shares of Stock directly to
the broker specified in the notice and shall accept payment of the purchase
price in cash or by check from such broker on behalf of the Employee and shall
take all action necessary to comply with the provisions of the applicable
regulations of the Securities Exchange Act of 1934 and with such additional
rules and regulations as may be applicable. Notwithstanding the foregoing, the
Company shall not be required to comply with, and may unilaterally terminate,
the provisions of this Paragraph 4 if, as a result of a change in the
accounting rules and regulations applicable to the Company, or the
interpretation thereof, compliance with the provisions of this Paragraph 4 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 Employee for federal or state income
tax purposes, Employee shall pay to the Company at the time of such exercise or
disposition such amount of money as the Company may require to meet its
obligation under applicable tax laws or regulations, and, if Employee fails to
do so, the Company is authorized to withhold from any cash or Stock
remuneration then or thereafter payable to Employee 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 Employee upon such exercise.
6. STATUS OF STOCK. Until the shares of Stock acquirable upon
the exercise of the Option have been registered for issuance under the
Securities Act of 1933 (the "Act"), the Company will not issue such shares
unless the holder of the 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
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this Option, Employee (or the person permitted to exercise this Option in the
event of Employee'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.
Employee agrees that the shares of Stock which Employee may acquire by
exercising this Option shall be acquired for investment without a view to
distribution, within the meaning of the Act, and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement for the shares under the Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Act and any applicable state securities laws. Employee also agrees that
the shares of Stock which Employee 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 securities laws, whether federal or state.
In addition, Employee agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Committee deems appropriate in order to assure compliance with
applicable securities laws, (ii) that 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 (iii) that 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. NON-COMPETITION OBLIGATIONS. In connection with Employee's
employment by Employer, Employer shall provide Employee with access to
Employer's confidential information, or shall provide Employee the opportunity
to develop business good will inuring to the benefit of Employer, or shall
entrust business opportunities to Employee. Employee has agreed, and hereby
agrees, as specified in more detail in Employee's invention disclosure and
confidentiality agreement with Employer, to maintain the confidentiality of
Employer's information and to exercise the highest measures of fidelity and
loyalty in the protection and preservation of Employer's goodwill and business
opportunities. As part of the consideration for the Option granted to Employee
hereunder; to protect Employer's confidential information, the business good
will of Employer that has been and will in the future be developed in Employee,
or the business opportunities that have been and will in the future be
disclosed or entrusted to Employee by Employer; and as an additional incentive
for Employer and Employer to enter into this Agreement, Employer and Employee
agree to the non-competition obligations hereunder: Employee will not,
directly or indirectly for Employee or for others, in any geographic area or
market where Employer is conducting any business as of the date of termination
of the employment relationship or has during the previous twelve months
conducted such business:
(i) engage in any business competitive with the business conducted
by Employer; or
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(ii) render advise or services to, or otherwise assist, any other
person, association, or entity who is engaged, directly or indirectly,
in any business competitive with the business conducted by Employer
with respect to such competitive business; or
(iii) directly or indirectly solicit or accept business competitive
with the business conducted by Employer from any customers or
prospects of Employer; or
(iv) induce any employee of Employer to terminate his or her
employment with Employer or hire or assist in the hiring of any such
employee by any person, association, or entity.
These non-competition obligations shall extend during the employment
relationship between Employer and Employer and for one year after termination
of the employment relationship, irrespective of how the employment relationship
is terminated, whether by Employer or Employee, whether or not for cause.
Employee understands that the foregoing restrictions may limit his
ability to engage in certain businesses in certain areas of the world during
the period provided for above, but acknowledges that Employee's remuneration
from Employer and Employee's benefits under this Agreement justify such
restriction.
Employee acknowledges that Employer's money damages should Employee
breach his obligations under this covenant shall be difficult, if not
impossible, to determine with the degree of accuracy required by law. As such,
Employer and Employee agree to the following liquidated damages with respect to
the breach of this covenant: Employer shall be entitled to recover from
Employee, and Employee shall pay to Employer, the amount of money equal to the
gain, if any, that Employee received from the exercise of this Option in the
one year period of time immediately preceding the date of termination of
employment. Moreover, Employer shall be entitled to enforce the provisions of
this Section 7 by specific performance and injunctive relief. These remedies
shall not be deemed the exclusive remedies for a breach of this Section 7.
Additionally, in the event that Employee's breach of this Section 7 results in
a situation where it is possible to determine Employer's money damages to the
degree required by law, Employee shall be liable to Employer for such money
damages, subject to a credit for the liquidated damages specified above that
are paid by Employee to Employer.
It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Section 7 to be reasonable and
necessary to protect the proprietary information of Employer. Nevertheless, if
any of the aforesaid restrictions are found by a court having jurisdiction to
be unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by such courts so as to be reasonable and enforceable and, as so
modified by the court, to be fully enforced. In the event that the liquidated
damage provision of this Section 7 is declared by a court to be unenforceable,
it shall be stricken from this agreement and the remainder of this agreement
shall be fully enforced.
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Nothing herein shall modify the at-will nature of the employment
relationship between Company and Employee.
8. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of either 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, and its determination shall
be final.
9. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Employee has executed
this Agreement, all as of the day and year first above written.
BMC SOFTWARE, INC.
BY:
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EMPLOYEE
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