Exhibit 10.1


 


[BLADELOGIC
LETTERHEAD]


 


October 2, 2007


 


 


Jeffrey Liotta


59 Wild Rose Drive


Andover, MA 
01810


 


Re:          Separation
from Employment


Dear Jeff:


This letter confirms your separation from employment
with BladeLogic, Inc.  (the “Company”).  This letter also proposes an agreement
between you and the Company.


Your employment with the Company shall terminate
effective October 5, 2007 (the “Separation Date”) and the Company will
pay you on the Separation Date your salary through the Separation Date.


The Company shall provide you with the right to
continue group medical and dental insurance coverage after the ending of your
employment under the law known as “COBRA.” 
The terms for that opportunity will be set forth in a separate written
notice.  The termination of other
benefits will be addressed in separate correspondence.  Basically, your eligibility to participate in
any other employee benefit plans and programs of the Company ceases on or after
the ending of your employment in accordance with applicable benefit plan or
program terms and practices.


As more fully described below, you shall have the
right to exercise any and all vested options that you hold to purchase common
stock of the Company, pursuant to and subject to the terms of the Company’s
2001 Stock Option and Grant Plan (“2001 Plan”) and 2007 Stock Option and
Incentive Plan (“2007 Plan”), the three Incentive Stock Option
Agreements you entered into with the Company, dated June 23, 2006 (the “June
2006 ISO Agreement”), April 5, 2007 (the “April 2007 ISO Agreement”)
and July 24, 2007 (the “July 2007 ISO Agreement”), and the three
Non-Qualified Stock Option Agreements you entered into with the Company, dated
June 23, 2006 (the “June 2006 NQ Agreement”), April 5, 2007 (the “April
2007 NQ Agreement”)  and July 24,
2007 (the “July 2007 NQ Agreement”) (collectively the “Option
Agreements”).  You shall also have
the right to retain any shares purchased by you under a Restricted Stock
Agreement you entered into with the Company, dated June 23, 2006 (the “June
2006 RS Agreement”, and with the Option Agreements, the “Equity
Agreements”), subject to the Company’s right to repurchase any such shares
which have not vested.  Please note that
all share and option data, and price data, has been retroactively adjusted to
reflect the 1-for-2 reverse stock split that the Company effected on June 14,
2007


The Company shall also reimburse you for any
outstanding, reasonable business expenses that you have incurred on the Company’s
behalf through the Separation Date, provided within thirty days of the ending
of your employment you submit to the Company of appropriate documentation
pursuant to the Company’s business expense reimbursement policy.


Regardless of whether you enter into this Agreement
you are obligated, among other things, to comply with the post-employment
confidentiality, non-competition and nonsolicitation and other provisions set
forth in the Employee Noncompetition Nondisclosure and Developments
Agreement  you entered into with the
Company on June 22, 2006 (“Noncompetition Agreement”).


The payments and
other terms set forth above will not be affected by whether or not you agree to
the terms set forth below.


 


 

















 


The remainder of this letter proposes an agreement
(the “Agreement”) between you and the Company.  The purpose of this Agreement is to establish
an amicable arrangement for ending your employment relationship, including
releasing the Company and related persons or entities from any claims and
permitting you to receive separation pay, related benefits and enhanced equity
rights.


If you agree to the terms of this Agreement, you
acknowledge that you are entering into this Agreement voluntarily.  By entering into this Agreement, you
understand that the Company is not admitting in any way that it violated any
legal obligation that it owed to you. 
With those understandings, you and the Company agree as follows:


Separation from
Employment


This confirms that your employment and any and all
other positions that you held with the Company as an officer, director or
otherwise, shall terminate effective on the Separation Date.


Severance Benefits


Severance Pay.  The Company shall pay you severance pay (“Severance
Pay”) consisting of salary continuation at your final base salary rate of
$175,000 per year until the earlier of: (a) the six month period from the date
immediately following the Separation Date, or (b) you become re-employed (the “Severance
Period”).  The Company shall pay you
Severance Pay on its regular payroll dates applicable to your position with the
Company, provided that
the Company is not obligated to include you on the payroll before the Effective
Date of this Agreement as defined in Section 22.  If the Company does not make one or more
payments of Severance Pay on a regular payroll date because this Agreement has
not yet become effective, the Company shall make all such missed payments by
the first payroll date after the Agreement becomes effective.


Health Benefits.  Your rights and obligations under COBRA are
explained in a separate letter to you describing your medical and dental
insurance continuation rights under COBRA. 
To continue your medical and dental insurance coverage, you must elect
COBRA continuation coverage.  If you
elect COBRA continuation coverage and provided that you and your beneficiaries remain
eligible for COBRA continuation coverage, the Company shall continue to pay for
medical and dental insurance premiums for coverage of you and your
beneficiaries to the same extent as if you had remained employed to the end of
the Severance Period.  You will be
responsible for the remaining portion of such coverage as if you remained
employed.  You hereby authorize the
deduction of the portion for which you are responsible from your Severance
Pay.  If you elect COBRA continuation
coverage, you may continue coverage for yourself and any beneficiaries after
the end of the Severance Period at your own expense for the remainder of the
COBRA period, to the extent you and they remain eligible.


Lump Sum Payment.  Pursuant to the terms of the 2007 Executive
Compensation Plan for Jeff Liotta, Vice President of Engineering (the “Bonus
Plan”), you must be actively employed at the time a payout is made to receive a
2007 bonus.  Nevertheless, in exchange
for and as consideration for you entering into this Agreement, the Company
shall pay you a lump sum payment of $67,034, less applicable deductions and
withholdings, payable within fourteen (14) days of the Effective Date.  You acknowledge and agree that this shall be
in lieu of any bonus payment you may have been entitled to under the Bonus Plan
or otherwise.


Equity


You hereby acknowledge
and agree that the Equity Agreements represent your entire agreement with the
Company with respect to the Company’s securities and that you have not received
nor been promised any additional equity, securities or other ownership rights
in the Company.


June 2006 RS Agreement


You purchased 62,500 shares of the Company’s common stock under the
June 2006 RS Agreement at $2.70 per share for an aggregate payment to the
Company of $168,750.  To the extent that
such shares of common stock have 


 


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not vested, they are subject to a repurchase right of the Company (“Shares
Subject to Repurchase”)(1).  The
Shares Subject to Repurchase may be repurchased by the Company in accordance
with the terms and conditions of the June 2006 RS Agreement.






(1)  Please note that the June 20, 2006 offer letter (“Offer Letter”) does not provide for continued vesting of
restricted stock.


However, and provided you
enter into and do not revoke this Agreement you shall continue to vest in the
restricted shares through the Severance Period. 
Depending on the length of the Severance Period, the number of Shares
Subject to Repurchase, as indicated below, may be reduced and Vested Restricted
Shares, as indicated below, may increase.


You acknowledge and agree that the following table accurately
summarizes your rights with respect to the Company’s restricted stock as of the
Separation Date:


 




	
  Number
  of

  Restricted

  Shares

  	
   

  	
  Aggregate

  Price Paid

  	
   

  	
  Vested
  Restricted Shares

  	
   

  	
  Shares
  Subject

  to Repurchase

  	
   

  	
  Repurchase
  Price Per Share

  
	
  62,500

  	
   

  	
  $

  	
  168,750

  	
   

  	
  19,531

  	
   

  	
  42,969

  	
   

  	
  $

  	
  2.70

  
											






 


Option Agreements


In addition, you were granted an aggregate of 220,125 options under the
Option Agreements, none of which have been exercised.  Pursuant to the terms of the Option
Agreements, options  that have not vested
as of the Separation Date lapse and are not exercisable (“Lapsed Options”).


 


However, consistent with terms of the Offer Letter, provided you enter
into and do not revoke this Agreement you shall continue to vest in the stock
options through the Severance Period. 
Depending on the length of the Severance Period, the number of Lapsed
Options, as indicated below, may be reduced and Vested Options, as indicated
below, may increase.


 


You acknowledge and agree that the following table accurately
summarizes your rights with respect to all the stock options you hold as of the
Separation Date:


 


 




	
  Option Agreement

  	
   

  	
  Options

  Awarded

  	
   

  	
  Vested

  Options

  	
   

  	
  Lapsed

  Options

  	
   

  	
  Exercise Price Per

  Share

  	
   

  
	
  June 2006 ISO
  Agreement

  	
   

  	
  148,148

  	
   

  	
  46,296

  	
   

  	
  101,852

  	
   

  	
  $2.70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  June 2006 NQ
  Agreement

  	
   

  	
  39,352

  	
   

  	
  12,297

  	
   

  	
  27,055

  	
   

  	
  $2.70

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 2007 ISO
  Agreement

  	
   

  	
  9,749

  	
   

  	
  0

  	
   

  	
  9,749

  	
   

  	
  $10.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  April 2007 NQ
  Agreement

  	
   

  	
  12,000

  	
   

  	
  0

  	
   

  	
  12,000

  	
   

  	
  $10.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  






 


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  July 2007 ISO
  Agreement

  	
   

  	
  3,461

  	
   

  	
  0

  	
   

  	
  3,461

  	
   

  	
  $17.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  July 2007 NQ
  Agreement

  	
   

  	
  7,414

  	
   

  	
  0

  	
   

  	
  7,414

  	
   

  	
  $17.00

  	
   

  






 


Your rights to exercise
Vested Options are governed by the procedures set forth in the Option
Agreements and the 2001 Plan, provided however,
you shall have six months after the Separation Date to exercise Vested Options.


Tax Treatment


The Company shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this
Agreement to the extent that it reasonably and in good faith determines that it
is required to make such deductions, withholdings and tax reports.  Payments under this Agreement shall be in
amounts net of any such deductions or withholdings.  Nothing in this Agreement shall be construed
to require the Company to make any payments to compensate you for any adverse
tax effect associated with any payments or benefits or for any deduction or
withholding from any payment or benefit.


Return of Property


You confirm that, to the best of your knowledge, you
have returned to the Company all Company property, including, without
limitation, computer equipment, laptops, blackberries, software, keys and
access cards, credit cards, files and any documents (including computerized
data and any copies made of any computerized data or software) containing
information concerning the Company, its business or its business relationships
(in the latter two cases, actual or prospective).  You
also commit to deleting and finally purging any duplicates of files or
documents that may contain Company information from any computer or other
device that remains your property after the Separation Date.  In the event that you discover that
you continue to retain any such property, you shall return it to the Company
immediately.


Confidential Information and Blackout


You understand and agree that you have been employed
in a position of confidence and trust and have had access to information
concerning the Company that the Company treats as confidential and the
disclosure of which could negatively affect the Company’s interests (“Confidential
Information”).  Confidential
Information includes, without limitation, confidential financial information;
business forecasts; inventions; improvements and other intellectual property;
trade secrets; know-how; designs, processes or formulae; confidential software;
marketing or sales information or plans; customer lists; and business plans,
prospects and opportunities.  You agree
that you shall not use or disclose any Confidential Information at any time
without the written consent of the Company. 
These obligations supplement and in no way diminish your confidentiality
obligations pursuant to the Offer Letter and the Noncompetition Agreement.


In addition, you understand and acknowledge that you
are subject to the Company’s Insider Trading Procedures (the “Insider
Trading Procedures”) as executed by you on August 14, 2007 and, as such,
may not trade in the Company’s securities in accordance therewith until the
third business day after the Company’s public announcement of its results for
the fiscal year ended September 30, 2007. 
You acknowledge and agree that you are subject to the securities laws of
the United States, including the reporting obligations of Section 16 of the
Securities and Exchange Act of 1934, as amended, and the Company’s Insider
Trading Policy executed by you on August 14, 2007 and you agree that you will
trade the Company’s stock only in accordance with all laws and regulations and
only after you no longer possess any material, nonpublic information relating
to the Company.


Noncompetition, Nonsolicitation and
Nondisclosure  


The Confidential
Information and Restrictive Covenants provisions of the Offer Letter and the
Noncompeitition Agreement continue to be in full force and effect and are
hereby incorporated by reference.  You
understand and acknowledge that the Company will file a Current Report on Form
8-K with the Securities and Exchange


 


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Commission to report the departure from employment of
an executive officer and that this Agreement will be filed as an exhibit to
such Current Report.


Notice of Future Employment.   


For twelve (12) months following the Separation Date,
you agree to notify the Company of any change in your address and of each
subsequent employment or business activity, including the name and address of
your employer and the nature of my activities. 
You agree to provide a copy of the Offer Letter and the Noncompetition
Agreement to any prospective employer, partner or co-venturer prior to entering
into an employment, partnership or other business relationship with such person
or entity at any time during the twelve (12) month period following the
Separation Date.


Release of Your Claims


In consideration for, among other terms, the payments
and benefits described above, to which you acknowledge you would otherwise not
be entitled, you voluntarily release and forever discharge the Company, its
affiliated and related entities, its and their respective predecessors,
successors and assigns, its and their respective employee benefit plans and
fiduciaries of such plans, and the current and former officers, directors,
shareholders, employees, attorneys, accountants and agents of each of the
foregoing in their official and personal capacities (collectively referred to
as the “Releasees”) generally from all claims, demands, debts, damages
and liabilities of every name and nature, known or unknown (“Claims”)
that, as of the date when you sign this Agreement, you have, ever had, now
claim to have or ever claimed to have had against any or all of the
Releasees.  This release includes,
without limitation, all Claims:


•                  relating to your employment by and termination of employment with the
Company;


•                  of wrongful discharge;


•                  of breach of contract;


•                  of retaliation or discrimination under federal, state or local law
(including, without limitation, Claims of age discrimination or retaliation
under the Age Discrimination in Employment Act, Claims of disability
discrimination or retaliation under the Americans with Disabilities Act, and
Claims of discrimination or retaliation under Title VII of the Civil Rights Act
of 1964);


•                  under any other federal or state statute;


•                  of defamation or other torts;


•                  of violation of public policy;


•                  for wages, bonuses, incentive compensation, stock, stock options,
vacation pay or any other compensation or benefits; and


•                  for damages or other remedies of any
sort, including, without limitation, compensatory damages, punitive damages,
injunctive relief and attorney’s fees;


provided, however, that this release shall not affect
your rights under this Agreement, your vested rights under the Equity
Agreements or under the Company’s 401(k) plan, or your indemnity rights including
those under the Indemnification Agreement dated July 12, 2007 between you and
the Company.


As a material inducement to the Company to enter into
this Agreement, you represent that you have not assigned to any third party and
you have not filed with any agency or court any Claim released by this
Agreement.


Release of the Company’s
Claims


In consideration
for, among other terms, your release of Claims pursuant to Section 9, the
Company voluntarily releases and forever discharges you generally from all Claims
that, as of the date when the Company signs this Agreement, the Company has,
ever had, now claims to have or ever claimed to have had against you which
relate to good faith acts or omissions by you during the course of your
employment with the Company undertaken or not undertaken in the reasonable
belief that such acts or omissions were in the best interests of the Company.


 


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Nondisparagement  


You agree not to make any disparaging statements
concerning the Company or any of its affiliates or current or former officers,
directors, shareholders, employees or agents. 
The Company shall instruct Dev Ittycheria, Vijay Manwani, John McMahon,
John Gavin and Vance Loiselle (the “Named Individuals”) not to make disparaging
statements about you.  A violation of this provision will be deemed a
material breach of Agreement and, in addition to all other legal remedies, will
entitle the Company to terminate or suspend payments without affecting the
remainder of the Agreement.   These nondisparagement obligations shall not
in any way affect your obligation or the obligations of the Named Individuals
to testify truthfully in any legal proceeding.


Communications Concerning Your Separation  


If asked about the circumstances of your separation of
employment with the Company, you shall state that you resigned or left to
pursue other opportunities and shall not make any further comment about your
employment separation. The Company shall instruct  the Named Individuals  to respond to any inquiries about the
ending of your employment by stating that you resigned to pursue other
opportunities and not to make any further comment about your employment
separation.  Nothing in  this
Section 12 shall be construed to prohibit you or any of the Named Individuals
from testifying truthfully in any legal proceeding, providing truthful
information in response to a request from a governmental agency, or providing
truthful information in response to a request for information in connection
with your application for employment with another employer.


Future Cooperation  


Except as may otherwise be required by law or to the
extent, in the written opinion of counsel, a conflict of interest exists, you
agree to cooperate reasonably with the Company (including its outside counsel)
in connection with the contemplation, prosecution and defense of all phases of
existing, past and future litigation about which the Company believes you may
have knowledge or information.  You
further agree to make yourself available at mutually convenient times during
and outside of regular business hours as reasonably deemed necessary by the
Company’s counsel.  You agree to appear
without the necessity of a subpoena to testify truthfully in any legal
proceedings in which the Company calls you as a witness.  In exchange for the cooperation required
above, the Company agrees to compensate you at the rate of $87.50/hour for time
spent performing your obligations under this Section, said amount being the
hourly rate of your final salary with the Company, plus reasonable expenses, provided that your right to such
compensation shall not apply to time spent in activities that could have been
compelled pursuant to a subpoena, including testimony and related attendance at
depositions, hearings or trials.  The
Company further agrees to pay the foregoing compensation within thirty (30)
days of your submission of an invoice for your services under this Section.


Suspension or Termination of Payments


In the event that you fail to comply with any of your
obligations under this Agreement, including without limitation, your continuing
post-employment obligations under the Noncompetition Agreement and the Insider
Trading Procedures, in addition to any other legal or equitable remedies it may
have for such breach the Company shall have the right to terminate or suspend
its payments, benefits and equity enhancement opportunities to you under this
Agreement.  The termination or suspension
of such payments in the event of such breach by you will not affect your
continuing obligations under this Agreement.


Legal Representation


This Agreement is
a legally binding document and your signature will commit you to its
terms.  You acknowledge that you have
been advised to discuss all aspects of this Agreement with your attorney, that
you have carefully read and fully understand all of the provisions of this
Agreement and that you are voluntarily entering into this Agreement.


 


6

















 


Absence of Reliance


In signing this Agreement, you are not relying upon
any promises or representations made by anyone at or on behalf of the Company.


Enforceability


If any portion or provision of this Agreement
(including, without limitation, any portion or provision of any section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.


Waiver


No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the waiving party.  The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.


Enforcement


(a)           Jurisdiction.  You and the Company hereby agree that the
Superior Court of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts shall have the exclusive
jurisdiction to consider any matters related to this Agreement, including
without limitation any claim for violation of this Agreement.  With respect to any such court action, you (i)
submit to the jurisdiction of such courts, (ii) consent to service of process,
and (iii) waive any other requirement (whether imposed by statute, rule of
court or otherwise) with respect to personal jurisdiction or venue.


(b)           Relief. 
You agree that it would be difficult to measure any harm caused to the
Company that might result from any breach by you of your promises set forth in
Sections,  and that in any event money
damages would be an inadequate remedy for any such breach.  Accordingly, you agree that if you breach, or
propose to breach, any portion of your obligations under Sections 5, 6, 7, 8,
11 or 13, the Company shall be entitled, in addition to all other remedies it
may have, to seek an injunction or other appropriate equitable relief to
restrain any such breach, without showing or proving any actual damage to the
Company and without the necessity of posting a bond.  In the event that the Company prevails in any
action to enforce Sections 5, 6, 7, 8, 11 or 13, then you also shall be liable
to the Company for attorney’s fees and costs incurred by the Company in
enforcing such provision(s).  In
addition, in the event that you breach any portion of Section 7, as
incorporated herein, you agree that the restrictions of Section 7, shall remain
in effect for the period of such breach notwithstanding the period of twelve
months set forth in the Offer Letter and the Noncompetition Agreement.


Governing Law; Interpretation


This Agreement shall be interpreted and enforced under
the laws of the Commonwealth of Massachusetts, without regard to conflict of
law principles.  In the event of any
dispute, this Agreement is intended by the parties to be construed as a whole,
to be interpreted in accordance with its fair meaning, and not to be construed
strictly for or against either you or the Company or the “drafter” of all or
any portion of this Agreement.


Entire Agreement


This Agreement
constitutes the entire agreement between you and the Company.  This Agreement supersedes any previous
agreements or understandings between you and the Company including without
limitation the Offer Letter, the Bonus Plan and the Change in Control Agreement
between you and the Company dated June 12, 2007 provided that the
Indemnification Agreement, Noncompetition Agreement, the Insider Trading
Procedures and the Equity Agreements all remain in full force and effect
all as set forth herein.


 


7

















 


Time for Consideration;
Effective Date


You have the opportunity to consider this Agreement
for twenty-one (21) days before signing it. 
To accept this Agreement, you must return a signed original of this
Agreement so that it is received by the undersigned at or before the expiration
of this twenty-one (21) day period.  If
you sign this Agreement within less than twenty-one (21) days of the date of
its delivery to you, you acknowledge by signing this Agreement that such
decision was entirely voluntary and that you had the opportunity to consider
this Agreement for the entire twenty-one (21) day period.  You acknowledge and agree that changes to
this Agreement since the time it was first presented to you shall not restart
the twenty-one (21) day consideration period. 
For the period of seven (7) days from the date when this Agreement
becomes fully executed, you have the right to revoke this Agreement by written
notice to the undersigned.  For such a
revocation to be effective, it must be delivered so that it is received by the
undersigned at or before the expiration of the seven (7) day revocation period.  This Agreement shall not become effective or
enforceable during the revocation period. 
This Agreement shall become effective on the first business day
following the expiration of the revocation period (the “Effective Date”).


Counterparts


This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be taken to be
an original, but all of which together shall constitute one and the same
document.


Please indicate your agreement to the terms of this
Agreement by signing and returning to me the original of this letter within the
time period set forth above.


Very truly yours,


	
  BLADELOGIC, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John J. Gavin, Jr.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  John J. Gavin, Jr.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Senior Vice President and Chief Financial Officer

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  You are advised
  to consult with an attorney before signing this Agreement.  The foregoing is agreed to and accepted
  by:

  
	
   

  
	
   

  
	
   

  	
  /s/ Jeffrey Liotta

  	
   

  	
  October 18, 2007

  	
   

  
	
   

  	
  Jeffrey Liotta

  	
  Date

  	
   

  
									



 


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