Exhibit 10.14


 


BladeLogic, Inc. 

400 Fifth Ave 

Waltham, MA 02451


 


August
24, 2005


 


John McMahon 

245 Dutton Road 

Sudbury, MA 01776


 


Dear John:


 


On behalf of BladeLogic,
Inc. (hereinafter “BladeLogic” or “the Company”), I am pleased to offer you the
position of Senior Vice-President of Worldwide Sales & Customer Services of
BladeLogic. In making this offer, the Board and I are expressing our
enthusiastic support for your leadership skills and abilities. The purpose of
this letter is to detail the terms of your employment.


 


•                            Job Title & Responsibilities: You will
serve as the Senior Vice-President of Worldwide Sales & Customer Services
with the duties and responsibilities that are commensurate with this position
and will report to the President & CEO. You will devote all your business
time, skill, attention and best efforts to the Company’s business and to
discharge and fulfill the responsibilities assigned to you by the Company
during your employment. You shall not render any services to any person or
entity without receiving the prior written consent of the Company, and you
shall not engage in any activity that conflicts or interferes with the
performance of the duties and responsibilities of this position.


 


•                            Start Date: As soon as possible but no
later than September 12, 2005.


 


•                            Salary: $175,000 per year (hereinafter
referred to as your “base compensation”). You will be paid in accordance with
the Company’s normal payroll practice, and the Company will make such
deductions, withholdings and other payments which are required by law for taxes
and other charges, or which you request pursuant to payroll deductions chosen
by you.


 


•                            Bonus: In addition to your base
compensation, you will be eligible for an annual (prorated) commission bonus of
$225,000 per year (the “Commission Bonus”), paid on a quarterly basis, for
achieving specific revenue goals in accordance with the business plan set by
the President & CEO. Notwithstanding the foregoing, the maximum Commission
Bonus may exceed $225,000 per year as determined by your compensation plan,
which is not completed as of the date of this offer letter.


 


•                            Options: Subject to the approval of the
Board, you will be granted the option to purchase 970,215 (which equates to 2%
of all outstanding stock and granted but not exercised options) shares of
common stock issued pursuant to the Company’s 2001 Incentive Stock Option
Agreement. The exercise price for your options will be


 


 

















 


determined by the Board
of Directors at the next scheduled monthly Board meeting following your date of
hire (currently at $.80 per share). These options will vest in accordance with
the Company’s standard option agreement: 25% after the first year of employment
and on a monthly basis at the rate of 1/36th thereafter on the
remaining 75%. Your eligibility to receive such option as specified herein is
subject to and contingent upon execution of a stock option agreement between
you and the Company that memorializes the terms and conditions with respect
thereto.


 


•                            Benefits: You and/or your family will be
eligible for the Company’s benefit plans (i.e., including but not necessarily
limited to health and dental insurance and other benefits the Company may
choose to offer) to the extent that you meet the eligibility criteria of these
plans. Similarly, you will also be eligible for the Company’s standard vacation
and sick leave policies. The Company has the right to change, interpret or
modify these and all other plans or policies at any time.


 


•                            Confidential Information and Restrictive Covenants: As
an employee of the Company, you will have access to confidential information.
Moreover, you may, during the course of employment, develop certain information
or inventions that will be the property of the Company. You agree that for
twelve (12) months following the termination of your employment that you will
not either (a) become employed by, or retained as a consultant or independent
contractor of, an entity that is competitive with the business of the Company;
or (b) alone or as a partner, officer, director, employee, consultant,
independent contractor, agent or stockholder of any entity, engage in any
business activity which is in competition with the products or services being
developed, designed, manufactured, provided or sold by the Company at the time
of your termination of employment. To protect the interests of the Company, we
will require you to sign, as a condition of your employment, the Company’s
Employee Non-Competition, Non-Disclosure and Developments Agreement.


 


•                            Not In Violation of Any Non-Competition Agreements: By
acceptance of this offer of employment, you are assuring us that your
employment with BladeLogic would not violate any non-competition,
confidentiality or other obligations you may have with any current and/or
former employer. You are also certifying that you have provided us with copies
of any non-competition, confidentiality or other agreements that you signed in
conjunction with any current and/or former employment. BladeLogic reserves the
right to contact your former employer(s) if it has any concerns regarding any
non-competitive, confidentiality or other obligations that you may have.
BladeLogic also reserves the right to withdraw this offer or terminate your
employment if BladeLogic determines, in its sole discretion, that your employment
with us may violate any continuing obligations to a former employer. Any such
termination under this provision shall be with cause.


 


•                            Employment at Will: Neither the contents of
this letter nor any BladeLogic policy, procedure or practice, whether written
or verbal, or the acceptance of employment, constitutes a contract of
employment or promise to employ you, nor do they create an implied duty or
contractual obligation between you and BladeLogic. The Company is an “at will”
employer meaning that either you or the Company can terminate your employment
at any time and for any reason or no reason, with or without prior notice.


 


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This offer letter is a
summary of your initial at-will employment relationship with the Company and is
subject to later modification by the Company, provided, however, the Company
may not modify the following terms without your written consent: “base
compensation”, Commission Bonus, stock options, or the severance terms stated
in the “Termination without Cause” section.


 


•                            Employment Eligibility: You will provide
proof of your identity as well as your legal right to work in the United
States. If you are unable to prove your ability to legally work in the United
States within a reasonable period of time, the Company will immediately
terminate your employment with cause.


 


•                            Termination without Cause: During your
employment with the Company if you are terminated without “cause”, as defined
herein, then upon execution of a general release of claims satisfactory to the
Company, the Company will provide you with the following severance benefits:
six (6) months of salary continuation at your then current rate of base salary
(the salary continuation payments shall be paid to you in accordance with the
Company’s customary payroll practices, as such practices shall be established
or modified from time to time, and shall be subject to all applicable federal,
state and local withholding, payroll and other taxes), six months of
employer-paid group health benefits on the same basis as active employees and
six months continued vesting of your stock options. If at any time while you
are receiving severance benefits from BladeLogic you commence employment
elsewhere (to be determined at the discretion of the CEO) then your severance
benefits as described above will cease at that time. Except as may be provided
under this Agreement following termination of your employment (i) any benefits
to which you may be entitled pursuant to the Company plans, policies and
arrangements referred to above shall be determined and paid in accordance with
the terms of such plans, policies and arrangements, and (ii) you shall have no
right to receive any other compensation, or to participate in any other plan,
arrangement or benefit, with respect to future periods after such termination.


 


•                            Definition of Cause: “Cause” shall mean:
(i) fraud, misappropriation, embezzlement or other act of material misconduct
against the Company or any of its affiliates, including without limitation,
unauthorized use or disclosure of Company confidential information or trade
secrets; (ii) conviction of any criminal act involving a felony or crime of
moral turpitude, including without limitation, misappropriation of funds or
property; (iii) willful and knowing violation of any rules or regulations of
any governmental or regulatory body material to the business of the Company,
including without limitation, of any such rules or regulations related to
sexual harassment; (iv) any intentional or material failure to perform your
employment duties or obligations hereunder or material gross negligence in
performance of such duties; (v) any material breach of the terms of this offer
letter; or (vi) a good faith determination by the CEO based on objective
evidence that the use of drugs or alcohol is significantly interfering with
your performance of your duties hereunder.


 


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•                            Termination Due to Death or Disability: In
the event that your employment is terminated due to your death, the Company’s
obligations to pay base compensation, any Commission Bonus and any other
compensation or benefits shall terminate, except that your estate or
beneficiaries, as the case may be, shall be entitled to base compensation and
commissions earned through the end of the month in which death occurs. Your
executor or other representative of the estate shall have at least ninety (90)
days after your death to exercise any vested but unexercised options. In the
event that your employment is terminated due to Disability (as hereafter
defined), you shall be entitled to disability benefits in accordance with any
long-term disability (“LTD”) program then in effect for executives of the
Company as a group, if any. You or your representatives shall have at least
ninety (90) days after your termination to exercise any vested but unexercised
options. Any termination for death or Disability shall be deemed a “termination
with cause” solely for purposes of determining your ability to collect
severance benefits. All obligations of the Company to you or your estate after
death or Disability are set forth in this section alone. “Disability” shall
mean that you are unable to fulfill the duties and responsibilities of your
position at the Company for a period of time greater than three (3) consecutive
months due to illness or injury.


 


•                            Change of Control: In the event of a
winding up of the company in which there is a “Change of Control” as hereafter
defined, there shall be an accelerated vesting of employee’s shares equal to
the greater of i) 25% of your then unvested shares or ii) the number of your
then unvested shares that would have vested over the immediately following 6
months period. In the event you are involuntarily terminated after a Change in
Control all of your remaining unvested shares will vest immediately and be
immediately exercisable on the date of your termination. Involuntary
termination is defined as (i) without your express written consent, a
significant reduction of your duties or responsibilities relative to your
duties or responsibilities in effect immediately prior to such reduction; (ii)
without your express written consent, a material reduction by the Company of
your base/bonus as in effect immediately prior to such reduction, other than
any reduction that is a part of a general reduction of employee or officer
compensation; (iii) without your express written consent, your relocation to a
facility or a location such that the your daily commute is increased more than
fifty (50) miles, or (iv) any purported termination by the Company other than
for “Cause” (as defined above). A “Change of Control” shall be defined as
follows: any merger, consolidation, sale of all or substantially all of the
business assets of the Company or any sale or issuance of stock where the
number of shares of voting stock outstanding immediately before the effective
date of such transaction are converted into, exchanged for or represent less
than 50% of the voting stock of the surviving or resulting company immediately
after such transaction, provided that (i) an equity financing round and/or (ii)
a Private Transaction shall not be deemed to be a Change of Control. “Private
Transaction” means a transaction where the consideration received or retained
by the holders of the then outstanding Preferred Stock of the Company (or the
Common stock issued upon conversion thereof) does not consist of (i) cash or
cash equivalent consideration, (ii) securities which are registered under the
Securities Act of 1933, as amended (the “Securities Act”) and/or (iii)
securities for which the Company or any other issuer thereof has agreed to file
a


 


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registration statement
within 90 days of the completion of the transaction for resale to the public
pursuant to the Securities Act.


 


•                            Other: This letter may not be changed or
modified except by agreement in writing, signed by you and the CEO. This
agreement shall be governed, construed and enforced in accordance with the laws
of Massachusetts without regard to principles of conflicts of law. Should any
provision of this agreement, or portion thereof, be found invalid and
unenforceable, it shall be construed to be enforceable to the greatest extent
allowable under applicable law, and the remaining provisions shall continue in
force and effect.


 


•                            Terms of Offer: This offer will remain open
until the end of business on August 29, 2005. Please sign the enclosed copy of
this letter and return it via fax (781-207-5679) to me, with the original to
follow.


 


We are excited to have
you join the BladeLogic team and look forward to a long and mutually rewarding
relationship.


 


 


	
  Sincerely,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Dev Ittycheria

  	
   

  	
   

  	
   

  	
   

  
	
  Dev
  Ittycheria 

  President and CEO

  	
   

  	
   

  	
   

  
					



 


	
  Agreed to, accepted and
  acknowledged:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ John McMahon

  	
   

  	
   

  	
   

  	
  8/30/2005

  	
   

  
	
  John McMahon

  	
   

  	
   

  	
  Date

  
						



 


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