EXHIBIT 10.57
Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
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) 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 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.
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
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) Eric J. Pulaski, 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) Eric J. Pulaski, 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: RONALD E. ROSENTHAL
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 GROSS-UP PAYMENT - see Section 4.
2.17 GROSS-UP UNDERPAYMENT - see Section 4.
2.18 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 twelve (12) months
after the Change of Control Date.
2.19 MERGER TRANSACTION means a merger, consolidation or reorganization of
the Company with or into any other person or entity.
2.20 OVERPAYMENT - see Section 4.
2.21 PAYMENT - see Section 4.
2.22 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.
2.23 REDUCED AMOUNT - see Section 4.
2.24 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.
2.25 SPECIAL SEVERANCE BENEFITS - see Section 3.2.
2.26 SPECIAL SEVERANCE PAYMENT - see Section 3.2.
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
2.27 UNDERPAYMENT - see Section 4.
2.28 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 times 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
one (1) year 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 eighteen (18) months 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 upon
a Change of Control 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 at any time during
the period beginning on the Change of Control Date and
ending at 5 pm Houston time on the date six (6) months
after the Change of Control Date;
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
3) the Executive resigns for any reason, with or without the
occurrence of an event that constitutes Good Reason, at
any time during the period beginning on the date six (6)
months after the Change of Control Date and ending at 5 pm
Houston time on the date twelve (12) months after the
Change of Control Date; or
(4) 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
twelve (12) months after the Change of Control Date.
(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 ADDITIONAL PAYMENTS OR REDUCTIONS BY THE COMPANY. The provisions
of this Section 4 shall apply, anything in this Agreement to the
contrary notwithstanding, in the event that a determination is made (an
"EXCISE TAX APPLICABILITY DETERMINATION") 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.
4.1 Determination of Excise Tax Applicability. Subject to the provisions of
this Section 4, all determinations required to be made hereunder,
including whether a Gross-Up Payment (as defined below) is required and
the amount of such Gross-Up Payment, 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.
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
4.2 If Employment Has Lasted Six Months or More: If (i) the Accounting Firm
makes an Excise Tax Applicability Determination, and (ii) the
Termination Date occurs six (6) months or more after the stating date of
the Employment, then:
(a) The Executive shall be entitled to receive an additional payment
(a "GROSS-UP PAYMENT") in an amount such that after payment by
the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payments.
(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 Gross-Up Payments, which will not have been made by the
Company, should have been made (a "GROSS-UP UNDERPAYMENT"),
consistent with the calculations required to be made hereunder.
If the Company exhausts its remedies pursuant hereto and the
Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Gross-Up Underpayment that has occurred and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
4.3 If Employment Has Lasted Less Than Six Months: If (i) the Accounting
Firm makes an Excise Tax Applicability Determination, and (ii) the
Termination Date occurs less than six (6) months after the stating date
of the Employment, then (iii) 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 (x) an Excise Tax to be due on any Payment or portion thereof, or
(y) 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 4.3. 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 4.3 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.
(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
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
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 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.
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
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.
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.
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Change of Control Agreement EXECUTIVE: RONALD E. ROSENTHAL
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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Eric J. Pulaski, President Signature
and Chief Executive Officer
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