Document:

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Exhibit 10.10

BMC SOFTWARE, INC.

SHORT-TERM INCENTIVE PERFORMANCE AWARD PROGRAM

[As Amended and Restated Effective as of April 1, 2004]

I. RESTATEMENT AND PURPOSE OF PROGRAM

     1.1 Restatement of Program. The Compensation Committee of the Board of
Directors of BMC Software, Inc., a Delaware corporation (the “Company”), has
heretofore adopted the BMC Software, Inc. Short-Term Incentive Performance
Award Program (the “Program”). This instrument constitutes an amendment and
restatement of the Program in its entirety with no interruption in time,
effective as of April 1, 2004.

     1.2 Purpose of Program. The Program has been adopted by the Compensation
Committee of the Company’s Board of Directors to implement in part the
Performance Award provisions of the BMC Software, Inc. 2002 Employee Incentive
Plan (as amended from time to time, the “Employee Incentive Plan”). The
Program is intended to provide a method for attracting, motivating, and
retaining key employees to assist in the development and growth of the Company
and its Affiliates. The Program and Awards hereunder shall be subject to the
terms of the Employee Incentive Plan, including the limitations on the maximum
value of Awards contained therein.

II. DEFINITIONS AND CONSTRUCTION

     2.1 Definitions. Where the following words and phrases are used in the
Program or the Program Schedule, they shall have the respective meanings set
forth below, unless the context clearly indicates to the contrary:

     (a) “Affiliate” means any corporation, partnership, limited liability
company or partnership, association, trust or other organization which,
directly or indirectly, controls, is controlled by, or is under common control
with, the Company.

     (b) “Award” means, with respect to each Participant for a Performance
Period, such Participant’s opportunity to earn a Payment Amount for such
Performance Period upon the satisfaction of the terms and conditions of the
Program.

     (c) “Award Notice” means a written notice issued by the Company to a
Participant evidencing such Participant’s receipt of an Award with respect to a
Performance Period.

     (d) “Base Amount” means, with respect to each Participant and each
Performance Period, the annual base rate of pay paid or payable in cash by the
Company and the Affiliates to or for the benefit of the Participant for
services rendered or labor performed as in effect on the earlier of (i) the
date of the Participant’s termination of employment with the Company if a
Change in Control occurs during such Performance Period and the Participant’s
employment with the Company terminates on or after the date of such Change in
Control and during such Performance Period, (ii) the date of the Participant’s
termination of employment with the Company if such termination is by reason of
death, Disability or Retirement, or (iii) the last day of such Performance
Period; provided, however, that if “Base Amount” is to be determined

 

 

pursuant to clause (i) of this sentence, then in no event shall such
amount be less than the Participant’s annual base rate of pay paid or payable
in cash by the Company and the Affiliates to or for the benefit of the
Participant for services rendered or labor performed as in effect on the day
immediately preceding the date of the Change in Control. Base Amount shall be
determined without reduction for amounts a Participant could have received in
cash in lieu of (A) elective deferrals under the Company’s 1994 Deferred
Compensation Plan or (B) elective contributions made on such Participant’s
behalf by the Company or an Affiliate pursuant to a qualified cash or deferred
arrangement (as defined in section 401(k) of the Code) or pursuant to a plan
maintained under section 125 of the Code.

     (e) “Base Amount Multiplier” means, with respect to each Participant and
each Performance Period, a percentage assigned to such Participant by the
Committee for such Performance Period.

     (f) “Board” means the Board of Directors of the Company.

     (g) “Change in Control” means (i) the acquisition by any person or entity
(including a “group” as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of at least 50% of the Company’s outstanding
voting stock, (ii) an unapproved change in the majority of the Board, (iii) a
merger, consolidation, or similar corporate transaction in which the Company’s
shareholders immediately prior to the transaction do not own more than 60% of
the voting stock of the surviving corporation in the transaction, or (iv)
shareholder approval of the Company’s liquidation, dissolution, or sale of
substantially all of its assets.

     (h) “Code” means the Internal Revenue Code of 1986, as amended.

     (i) “Committee” means a committee of the Board comprised solely of two or
more outside directors (within the meaning of the term “outside directors” as
used in section 162(m) of the Code and applicable interpretative authority
thereunder and within the meaning of the term “Non-Employee Director” as
defined in Rule 16b-3). Such committee shall be the Compensation Committee of
the Board unless and until the Board designates another committee of the Board
to serve as the Committee.

     (j) “Company” means BMC Software, Inc., a Delaware corporation.

     (k) “Disability” or “Disabled” means, with respect to a Participant, such
Participant’s disability entitling him or her to benefits under the Company’s
group long-term disability plan.

     (l) “Effective Date” means April 1, 2004, as to this amendment and
restatement of the Program. The original effective date of the Program was
April 1, 2003.

     (m) “Eligible Employee” means any individual who is an employee of the
Company or an Affiliate.

     (n) “Employee Incentive Plan” means the BMC Software, Inc. 2002 Employee
Incentive Plan, as amended from time to time.

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     (o) “Participant” means an Eligible Employee who has received an Award
under the Program with respect to a Performance Period pursuant to Section 4.1.

     (p) “Participation Fraction” means, with respect to each Participant and
each Performance Period:

	 	(i)	 	if the Participant has been continuously employed
by the Company from the first day of such Participant’s
commencement of participation in the Program for such
Performance Period through the last day of such Performance
Period, a fraction, the numerator of which is the number of
days in the period beginning on the first day of such
Participant’s commencement of participation in the Program for
such Performance Period and ending on the last day of such
Performance Period (but excluding any days in such period
during which the Participant is on a voluntary personal leave
of absence), and the denominator of which is the number of
days in such Performance Period; and
	 
	 	(ii)	 	if (A) the Participant’s employment with the
Company terminates during such Performance Period by reason of
death, Disability or Retirement or (B) a Change in Control
occurs during such Performance Period and the Participant’s
employment with the Company terminates on or after the date of
such Change in Control and during such Performance Period for
any reason whatsoever, a fraction, the numerator of which is
the number of days in the period beginning on the first day of
such Participant’s commencement of participation in the
Program for such Performance Period and ending on the date of
such Participant’s termination of employment (but excluding
any days in such period during which the Participant is on a
voluntary personal leave of absence), and the denominator of
which is the number of days in such Performance Period.

     (q) “Payment Amount” means, with respect to each Participant and each
Award for a Performance Period, an amount that the Participant will be paid
under the Program if the Performance Goals with respect to such Award are
satisfied; provided, however, that a Participant’s Payment Amount for an Award
shall be subject to reduction as provided in Section 6.1 and may not exceed the
amount specified in Section 6.5. A Participant’s Payment Amount with respect
to a particular Award for a Performance Period shall be determined as provided
in the Program Schedule for such Performance Period.

     (r) “Performance Goal” means, with respect to each Participant and each
Award, a goal that must be achieved by the Company and/or its Affiliates in
order for the Participant to receive a Payment Amount with respect to such
Award. Performance Goals shall be established by the Committee and shall be
based on one or more of the performance measures specified in Paragraph VIII(b)
of the Employee Incentive Plan.

     (s) “Performance Period” means a period of time established by the
Committee over which a Performance Goal shall be measured.

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     (t) “Program” means this BMC Software, Inc. Short-Term Incentive
Performance Award Program, as amended from time to time.

     (u) “Program Schedule” means a schedule that constitutes a part of the
Program and details certain particulars with respect to the Program and Awards
hereunder for one or more Performance Periods. Each Program Schedule shall be
adopted by the Committee or shall be prepared by the appropriate officers of
the Company based on resolutions, minutes or consents adopted by the Committee.
There may be more than one Program Schedule under the Program. Each Program
Schedule is incorporated herein by reference and thereby made a part of the
Program, and references herein to the Program shall include the Program
Schedules.

     (v) “Retirement” means a Participant’s termination of employment with the
Company for any reason whatsoever after attaining the age of 65.

     2.2 Number, Gender, Headings, and Periods of Time. Wherever appropriate
herein, words used in the singular shall be considered to include the plural,
and words used in the plural shall be considered to include the singular. The
masculine gender, where appearing in the Program, shall be deemed to include
the feminine gender. The headings of Articles, Sections, and Paragraphs herein
are included solely for convenience. If there is any conflict between such
headings and the text of the Program, the text shall control. All references
to Articles, Sections, and Paragraphs are to this Program unless otherwise
indicated. Any reference in the Program to a period or number of days, weeks,
months, or years shall mean, respectively, calendar days, calendar weeks,
calendar months, or calendar years unless expressly provided otherwise.

III. ADMINISTRATION

     3.1 Administration by the Committee. The Program shall be administered by
the Committee.

     3.2 Powers of the Committee. The Committee shall supervise the
administration and enforcement of the Program according to the terms and
provisions hereof and shall have the sole discretionary authority and all of
the powers necessary to accomplish these purposes. The Committee shall have
all of the powers specified for it under the Program, including, without
limitation, the power, right, or authority: (a) to designate an Eligible
Employee as a Participant with respect to a Performance Period in accordance
with Section 4.1, (b) from time to time to establish rules and procedures for
the administration of the Program, which are not inconsistent with the
provisions of the Program or the Employee Incentive Plan, and any such rules
and procedures shall be effective as if included in the Program, (c) to
construe in its discretion all terms, provisions, conditions, and limitations
of the Program and any Award, (d) to correct any defect or to supply any
omission or to reconcile any inconsistency that may appear in the Program in
such manner and to such extent as the Committee shall deem appropriate, and (e)
to make all other determinations necessary or advisable for the administration
of the Program. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Program or in any Award or Award Notice in
the manner and to the extent it shall deem expedient to carry it into effect.

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     3.3 Committee Decisions Conclusive; Standard of Care. The Committee
shall, in its sole discretion exercised in good faith (which, for purposes of
this Section 3.3, shall mean the application of reasonable business judgment),
make all decisions and determinations and take all actions necessary in
connection with the administration of the Program. All such decisions,
determinations, and actions by the Committee shall be final, binding, and
conclusive upon all persons. The Committee shall not be liable for any action
or determination taken or made in good faith or upon reliance in good faith on
the records of the Company or information presented to the Committee by the
Company’s officers, employees, or other persons (including the Company’s
outside auditors) as to matters the Committee reasonably believes are within
such other person’s professional or expert competence. If a Participant
disagrees with any decision, determination, or action made or taken by the
Committee, then the dispute will be limited to whether the Committee has
satisfied its duty to make such decision or determination or take such action
in good faith. No liability whatsoever shall attach to or be incurred by any
past, present or future stockholders, officers or directors, as such, of the
Company or any of its Affiliates, under or by reason of the Program or the
administration thereof, and each Participant, in consideration of receiving
benefits and participating hereunder, expressly waives and releases any and all
claims relating to any such liability.

IV. PARTICIPATION AND AWARD NOTICES

     4.1 Participation. The Committee shall, from time to time, in its sole
discretion designate the Eligible Employees who shall become Participants in
the Program with respect to a Performance Period; provided, however, that an
Eligible Employee may not be selected for participation in the Program with
respect to a particular Performance Period after the last day of such
Performance Period. An Award to a Participant shall designate the type of such
Award and the Performance Period or Performance Periods to which such Award
relates. The Committee shall designate the Base Amount Multiplier that shall
apply to each Participant with respect to his participation in the Program. In
addition, if the effective date of a Participant’s participation in the Program
with respect to a Performance Period for which such Participant receives an
Award is after the first day of such Performance Period, then the Committee
shall designate the effective date of such Participant’s participation in the
Program with respect to such Performance Period.

     4.2 Award Notices. The Company shall provide an Award Notice to each
Eligible Employee who becomes a Participant under the Program as soon as
administratively feasible after such Eligible Employee becomes a Participant.
An Award Notice may specify one or more Performance Periods and/or types of
Awards with respect to which the Participant may participate in the Program.
Further, an Award Notice may provide that the Participant shall continue to
participate in the Program for successive Performance Periods until notified
otherwise by the Committee or, if earlier, the date upon which he terminates
employment with the Company. An Award Notice shall specify the Participant’s
Base Amount Multiplier, which may be changed on a prospective basis by the
Committee upon written notice to the Participant at any time prior to the
commencement of a Performance Period.

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V. PERFORMANCE GOALS

     5.1 Establishment of Performance Goals. The Committee shall, in its sole
discretion, establish the Performance Goal or Goals that shall apply with
respect to each Award for a Performance Period. The Performance Goals with
respect to an Award shall be established by the Committee not later than 90
days after the commencement of the period of service to which the Performance
Goals relate; provided, however, that if the Performance Goals for an Award
with respect to a Performance Period are established on or after the first day
of such Performance Period, then (a) the outcome with respect to the
satisfaction of such Performance Goals must be substantially uncertain at the
time such Performance Goals are so established and (b) in no event may such
Performance Goals be established after 25% of the period of service has
elapsed. Further, if the Committee has established Performance Goals with
respect to a particular Award, then the Committee may, in its sole discretion,
revise any of such Performance Goals so long as such revision is made on or
before the last date upon which the Committee could have originally established
such Performance Goals as described in the preceding sentence. Subject to the
foregoing, the Performance Goals established by the Committee for an Award with
respect to a Performance Period may include alternative targets that are
contingent on the occurrence or non-occurrence of a specified event. For
example, the Performance Goals for an Award may include (i) one set of targets
that will apply if an acquisition, divestiture or other specified corporate
event occurs during the related Performance Period and (ii) a separate set of
targets that will apply if such acquisition, divestiture or other specified
corporate event does not occur during such Performance Period.

     5.2 Subdivision or Consolidation of Shares; Stock Dividends. If, prior to
the last day of a Performance Period, the Company shall effect a subdivision or
consolidation of shares of its common stock or the payment of a stock dividend
on its common stock without receipt of consideration by the Company, then any
Performance Goal for an Award with respect to such Performance Period that is
based on or measured by a per share of common stock criteria shall be
proportionately adjusted by the Committee in a manner that reflects such event;
provided, however, that no such adjustment shall be made if the Performance
Goals established by the Committee for such Performance Period reflect that the
Committee considered such event in establishing such targets.

VI. AWARD PAYMENTS

     6.1 Determinations and Certification by the Committee. As soon as
administratively feasible after the end of each Performance Period, the
Committee shall determine whether the Performance Goals applicable to Awards
for such Performance Period were satisfied and, if such Performance Goals were
satisfied in whole or in part, the Payment Amount, if any, for each Participant
holding such an Award. Notwithstanding any provision herein to the contrary,
at any time prior to the date an amount is paid to or for the benefit of a
Participant pursuant to Section 6.2 with respect to a Performance Period, the
Committee may, in its sole discretion, reduce the Payment Amount that would
otherwise be payable pursuant to Section 6.2 (but not Section 6.3) to such
Participant for such Performance Period based on the Committee’s view of such
Participant’s performance and/or the Company’s performance during such
Performance Period. Any such reduction may be made with respect to one or more
Participants and not other Participants, and the magnitude of such reductions
may vary among

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individual Participants. The Committee’s determinations pursuant to the
preceding provisions of this Section 6.1 for each Performance Period and any
other material terms relating to the payment of an Award shall be certified by
the Committee in writing and delivered to the Secretary of the Company no later
than six weeks after the last day of such Performance Period. For purposes of
the preceding sentence, approved minutes of the Committee meeting in which the
certification is made shall be treated as a written certification.

     6.2 Eligibility for Payment of Awards. Upon the Committee’s written
certification in accordance with Section 6.1 that a Payment Amount for an Award
with respect to a Performance Period is due under the Program, each Participant
who has received an Award with respect to such Performance Period and who has
remained continuously employed by the Company or an Affiliate (or was on a
voluntary personal leave of absence approved by the Company) from the effective
date as of which such Participant received such Award until the last day of
such Performance Period shall be entitled to the Payment Amount applicable to
such Participant’s Award for such Performance Period. Further, if a
Participant received an Award with respect to such Performance Period and his
employment with the Company terminated during such Performance Period by reason
of death, Disability or Retirement, then such Participant shall be entitled to
the Payment Amount applicable to such Participant’s Award for such Performance
Period. Except as provided in the preceding sentence or in Section 6.3, if a
Participant’s employment with the Company terminates for any reason whatsoever
prior to the last day of a Performance Period, then such Participant shall not
be entitled to receive any payment under the Program with respect to his or her
Award for such Performance Period. Without limiting the scope of the preceding
sentence, if a Participant’s employment with the Company terminates during a
Performance Period by reason of death, Disability or Retirement, then such
Participant shall not be entitled to any payment under the Program with respect
to any Performance Period that begins after the date of such termination of
employment. Payment of the amount to which a Participant becomes entitled
pursuant to this Section 6.2 shall be made by the Company as soon as
administratively feasible after the Committee’s written certification that a
Payment Amount is due under the Program.

     6.3 Change in Control. Upon the occurrence of a Change in Control, the
provisions of Sections 6.1 and 6.2 shall cease to apply with respect to Awards
for the Performance Period during which such Change in Control occurs and the
Company shall be required to pay a Payment Amount (as determined below) for
such Awards to each Participant who is employed by the Company on the day
immediately prior to the Change in Control (or who is on a voluntary personal
leave of absence at such time that has been approved by the Company or who has
terminated employment with the Company during such Performance Period and prior
to such Change in Control by reason of death, Disability or Retirement). For
purposes of this Section 6.3, the Payment Amount for each Participant who is
entitled to a payment pursuant to this Section 6.3 shall be calculated as if
the Performance Goal or Goals applicable to an affected Award were achieved at
a level specified in the Program Schedule for purposes of this Section 6.3.
The Payment Amount determined under this Section 6.3 shall be paid to each
eligible Participant as soon as administratively feasible after the last day of
the Performance Period in which the Change in Control occurs; provided,
however, that (a) with respect to a Participant whose employment with the
Company terminated during such Performance Period and prior to the Change in
Control by reason of death, Disability or Retirement, then such payment shall
be paid to such Participant as soon as administratively feasible after the date
of the Change in

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Control, and (b) with respect to a Participant whose employment with the
Company terminated during such Performance Period and on or after the date of
the Change in Control for any reason whatsoever, then such payment shall be
paid to such Participant as soon as administratively feasible after the date of
his termination of employment.

     6.4 Form of Payment of Awards. All payments to be made under the Program
to a Participant with respect to an Award for a Performance Period shall be
paid in a single lump sum cash payment.

     6.5 Maximum Payment Amount. In no event shall the Payment Amount for an
Award for any particular Performance Period that is paid to or on behalf of any
one individual under this Program exceed $1,000,000; provided, however, that
all Payment Amounts for Awards hereunder shall be subject to the limitations
set forth in Paragraph V(a) of the Employee Incentive Plan.

VII. TERMINATION AND AMENDMENT OF PROGRAM

     The Committee may amend the Program at any time and from time to time;
provided, however, that the Program may not be amended after the last day of a
Performance Period in a manner that would impair the rights of any Participant
with respect to any outstanding Award pertaining to such Performance Period
without the consent of such Participant. The Committee may at any time prior
to the last day of a Performance Period terminate the Program (in its entirety
or as it applies to one or more specified Affiliates) with respect to such
Performance Period and subsequent Performance Periods. Notwithstanding the
foregoing, the Program may not be amended or terminated in contemplation of or
in connection with a Change in Control, nor may any Participant’s participation
herein be terminated in contemplation of or in connection with a Change in
Control, unless adequate and effective provision for the making of all payments
otherwise payable pursuant to Section 6.3 of the Program with respect to such
Change in Control shall be made in connection with any such amendment or
termination. The Committee shall remain in existence after the termination of
the Program for the period determined necessary by the Committee to facilitate
the termination of the Program, and all provisions of the Program that are
necessary, in the opinion of the Committee, for equitable operation of the
Program during such period shall remain in force.

VIII. MISCELLANEOUS PROVISIONS

     8.1 No Effect on Employment Relationship. For all purposes of the
Program, a Participant shall be considered to be in the employment of the
Company as long as he remains employed on a full-time basis by the Company or
any Affiliate. Without limiting the scope of the preceding sentence, it is
expressly provided that a Participant shall be considered to have terminated
employment with the Company at the time of the termination of the “Affiliate”
status under the Program of the entity or other organization that employs the
Participant. Nothing in the adoption of the Program, the grant of Awards, or
the payment of amounts under the Program shall confer on any person the right
to continued employment by the Company or any Affiliate or affect in any way
the right of the Company (or an Affiliate, if applicable) to terminate such
employment at any time. Unless otherwise provided in a written employment
agreement, the employment of each Participant shall be on an at-will basis, and
the employment relationship

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may be terminated at any time by either the Participant or the
Participant’s employer for any reason whatsoever, with or without cause. Any
question as to whether and when there has been a termination of a Participant’s
employment for purposes of the Program, and the reason for such termination,
shall be determined solely by and in the discretion of the Committee, and its
determination shall be final, binding, and conclusive on all parties.

     8.2 Prohibition Against Assignment or Encumbrance. No Award or other
right, title, interest, or benefit hereunder shall ever be assignable or
transferable, or liable for, or charged with any of the torts or obligations of
a Participant or any person claiming under a Participant, or be subject to
seizure by any creditor of a Participant or any person claiming under a
Participant. No Participant or any person claiming under a Participant shall
have the power to anticipate or dispose of any Award or other right, title,
interest, or benefit hereunder in any manner until the same shall have actually
been distributed free and clear of the terms of the Program. Payments with
respect to an Award shall be payable only to the Participant (or (a) in the
event of a Disability that renders such Participant incapable of conducting his
or her own affairs, any payment due under the Program to such Participant shall
be made to his or her duly appointed legal representative and (b) in the event
of the death of a Participant, any payment due under the Program to such
Participant shall be made to his or her estate). The provisions of the Program
shall be binding on all successors and permitted assigns of a Participant,
including without limitation the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant’s creditors.

     8.3 Unfunded, Unsecured Program. The Program shall constitute an
unfunded, unsecured obligation of the Company to make payments of incentive
compensation to certain individuals from its general assets in accordance with
the Program. Each Award granted under the Program merely constitutes a
mechanism for measuring such incentive compensation and does not constitute a
property right or interest in the Company, any Affiliate, or any of their
assets. Neither the establishment of the Program, the granting of Awards, nor
any other action taken in connection with the Program shall be deemed to create
an escrow or trust fund of any kind.

     8.4 No Rights of Participant. No Participant shall have any security or
other interest in any assets of the Company or any Affiliate or in the
securities issued by the Company or any Affiliate as a result of participation
in the Program. Participants and all persons claiming under Participants shall
rely solely on the unsecured promise of the Company set forth herein, and
nothing in the Program, an Award or an Award Notice shall be construed to give
a Participant or anyone claiming under a Participant any right, title,
interest, or claim in or to any specific asset, fund, entity, reserve, account,
or property of any kind whatsoever owned by the Company or any Affiliate or in
which the Company or any Affiliate may have an interest now or in the future;
but each Participant shall have the right to enforce any claim hereunder in the
same manner as a general creditor. Neither the establishment of the Program
nor participation hereunder shall create any right in any Participant to make
any decision, or provide input with respect to any decision, relating to the
business of the Company or any Affiliate.

     8.5 Tax Withholding. The Company and the Affiliates shall deduct and
withhold, or cause to be withheld, from a Participant’s payment made under the
Program, or from any other payment to such Participant, an amount necessary to
satisfy any and all tax withholding

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obligations arising under applicable local, state, federal, or foreign
laws associated with such payment. The Company and the Affiliates may take any
other action as may in their opinion be necessary to satisfy all obligations
for the payment and withholding of such taxes.

     8.6 No Effect on Other Compensation Arrangements. Nothing contained in
the Program or any Participant’s Award or Award Notice shall prevent the
Company or any Affiliate from adopting or continuing in effect other or
additional compensation arrangements affecting any Participant. Nothing in the
Program shall be construed to affect the provisions of any other compensation
plan or program maintained by the Company or any Affiliate.

     8.7 Affiliates. The Company may require any Affiliate employing a
Participant to assume and guarantee the Company’s obligations hereunder to such
Participant, either at all times or solely in the event that such Affiliate
ceases to be an Affiliate.

     8.8 Governing Law. The Program shall be construed in accordance with the
laws of the State of Texas.

     IN WITNESS WHEREOF, the undersigned officer of the Company acting pursuant
to authority granted to him by the Committee has executed this instrument as of
the 20th day of July, 2004, effective as of the Effective Date.

	 	 	 	 	 	 	 
	 	 	BMC SOFTWARE, INC.
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Jerome Adams	 	 
	

	 	Name:
	 	Jerome Adams	 	 
	

	 	Title:
	 	Senior Vice President, Administration	 	 

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PROGRAM SCHEDULE

UNDER THE BMC SOFTWARE, INC.

SHORT-TERM INCENTIVE PERFORMANCE AWARD PROGRAM

FOR PERFORMANCE PERIODS DURING THE FISCAL YEAR

BEGINNING ON APRIL 1, 2004

Capitalized terms that are not defined in this Program Schedule shall have the
meanings assigned to such terms in the BMC Software, Inc. Short-Term Incentive
Performance Award Program, as amended and restated effective as of April 1,
2004. This Program Schedule applies to all Performance Periods during the
Company’s fiscal year beginning on April 1, 2004.

	1.	 	EPS Awards

EPS Performance Period – Each three-month period beginning on April 1, 2004,
July 1, 2004, October 1, 2004, and January 1, 2005. An EPS Performance Period
constitutes a Performance Period under the Program.

EPS
- With respect to an EPS Performance Period, the non-GAAP earnings per
share of common stock of the Company for such EPS Performance Period as
reported by the Company in its quarterly earnings press release which equals
reported earnings per share of common stock of the Company for such EPS
Performance Period, calculated in accordance with generally accepted accounting
principles (“GAAP”), but adjusted as follows:

	 	(i)	 	Exclude acquisition related expenses for acquired
research and development;
	 
	 	(ii)	 	Exclude amortization of acquired technology and
intangibles;
	 
	 	(iii)	 	For the EPS Performance Period that begins on
April 1, 2004 (but not for any subsequent EPS Performance
Period), exclude the earnings or losses generated with respect
to assets or businesses acquired during such EPS Performance
Period from the date of close of such acquisition to the last
day of such Performance Period;
	 
	 	(iv)	 	For the EPS Performance Period that begins on
April 1, 2004 (but not for any subsequent EPS Performance
Period), add or subtract the earnings or losses that would
have been generated with respect to assets or businesses
divested during such EPS Performance Period from the date of
close of such divestiture to the last day of the EPS
Performance Period (the amount of such earnings and losses for
such period shall be based on budgeted revenues and expenses
established as of the first day of such EPS Performance
Period); and
	 
	 	(v)	 	Exclude or add the effect of any non-recurring
extraordinary items;

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provided, that no such adjustment shall be made to earnings per share
calculated in accordance with GAAP to the extent that the EPS targets
established by the Committee for such EPS Performance Period reflect that the
Committee considered the adjustment, or event leading to the adjustment, in
establishing such targets. In addition, EPS for an EPS Performance Period
shall be calculated without regard to any change in GAAP accounting standards
that takes effect during such EPS Performance Period unless the EPS targets
established by the Committee for such EPS Performance Period reflect that the
Committee considered such change in establishing such targets. EPS for each
EPS Performance Period shall be rounded to the nearest penny. The EPS targets
for each EPS Performance Period were initially established by the Committee in
accordance with Section 5.1 of the Program at a meeting of the Committee held
on April 19, 2004, and such EPS targets are reflected in the minutes to such
meeting. EPS constitutes a Performance Goal under the Program.

EPS
Award - With respect to each Participant for an EPS Performance Period,
such Participant’s opportunity to earn an EPS Payment Amount for such EPS
Performance Period upon the satisfaction of the terms and conditions of the
Program. EPS Awards shall constitute Awards under the Program and Performance
Awards (as such term is defined in the Employee Incentive Plan) under the
Employee Incentive Plan that are based on the Company’s earnings per share (as
more fully described in this Program Schedule).

EPS
Payment Amount - With respect to each Participant and each EPS Award for an
EPS Performance Period for which at least the minimum EPS target has been
achieved by the Company, an amount equal to A multiplied by B multiplied by C
multiplied by D multiplied by E, where:

	 	A	 	equals the incentive compensation attainment percentage
determined for such EPS Performance Period from the schedules
approved by the Committee at its meeting on April 19, 2004, based on
the actual EPS achieved by the Company for such EPS Performance
Period;
	 
	 	B	 	equals such Participant’s Base Amount for such EPS
Performance Period;
	 
	 	C	 	equals such Participant’s Base Amount Multiplier for such EPS
Performance Period;
	 
	 	D	 	equals 17.5%; and
	 
	 	E	 	equals such Participant’s Participation Fraction for such EPS
Performance Period.

An EPS Payment Amount constitutes a Payment Amount under the Program.

2. Net Bookings Awards

Net Bookings Performance Period – The 12-month period beginning on April 1,
2004. The Net Bookings Performance Period constitutes a Performance Period
under the Program.

Net Bookings –With respect to the Net Bookings Performance Period, the total
dollar value of all license and maintenance contracts (based on the actual
contract value) received by the Company

-12-

 

and its subsidiaries during the Net Bookings Performance Period, regardless of
whether such contracts are booked currently or ratably. To be considered as a
booking, revenue from a contract must result in a financial statement impact,
either on the Company’s income statement as revenue or on the Company’s balance
sheet as deferred revenue. The Net Bookings targets for the Net Bookings
Performance Period were initially established by the Committee in accordance
with Section 5.1 of the Program at a meeting of the Committee held on April 19,
2004, and such Net Bookings targets are reflected in the minutes to such
meeting. Net Bookings constitutes a Performance Goal under the Program.

Net
Bookings Award – With respect to each Participant for the Net Bookings
Performance Period, such Participant’s opportunity to earn a Net Bookings
Payment Amount for the Net Bookings Performance Period upon the satisfaction of
the terms and conditions of the Program. Net Bookings Awards shall constitute
Awards under the Program and Performance Awards (as such term is defined in the
Employee Incentive Plan) under the Employee Incentive Plan that are based on
the Company’s sales (as more fully described in this Program Schedule).

Net Bookings Payment Amount – If at least the minimum Net Bookings target for
the Net Bookings Performance Period has been achieved, then an amount
determined with respect to each Participant and each Net Bookings Award in an
amount equal to A multiplied by B multiplied by C multiplied by D multiplied by
E, where:

	 	A	 	equals the incentive compensation attainment percentage
determined for the Net Bookings Performance Period from the schedule
approved by the Committee at its meeting on April 19, 2004, based on
the actual Net Bookings achieved by the Company for the Net Bookings
Performance Period;
	 
	 	B	 	equals such Participant’s Base Amount for the Net Bookings
Performance Period;
	 
	 	C	 	equals such Participant’s Base Amount Multiplier for the Net
Bookings Performance Period;
	 
	 	D	 	equals 30%; and
	 
	 	E	 	equals such Participant’s Participation Fraction for the Net
Bookings Performance Period.

A Net Bookings Payment Amount constitutes a Payment Amount under the Program.

3. Change in Control

For purposes of the second sentence of Section 6.3 of the Program, the EPS
Payment Amount for an EPS Award with respect to an EPS Performance Period
during which a Change in Control occurs shall be calculated as provided in
section 1 above as if the EPS actually achieved during such EPS Performance
Period was (i)    if the Change in Control occurs during the EPS Performance
Period beginning on April 1, 2004, (ii)    if the Change in Control occurs
during the EPS Performance Period beginning on July 1, 2004,
(iii) ______ if the
Change in Control occurs during the EPS Performance Period beginning on October
1, 2004, or (iv) ______ if the Change in Control occurs during the EPS
Performance Period beginning on January 1, 2005.

-13-

 

If a Change in Control occurs during the Net Bookings Performance Period, then,
for purposes of the second sentence of Section 6.3 of the Program, the Net
Bookings Payment Amount for a Net Bookings Award shall be calculated as
provided in section 2 above as if the Net Bookings actually achieved for the
Net Bookings Performance Period was equal to________.

     IN WITNESS WHEREOF, the undersigned officer of the Company acting pursuant
to authority granted to him by the Committee has executed this instrument as of
the 20th day of July, 2004, effective as of the Effective Date.

	 	 	 	 	 	 	 
	 	 	BMC SOFTWARE, INC.
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Jerome Adams	 	 
	

	 	Name:
	 	Jerome Adams	 	 
	

	 	Title:
	 	Senior Vice President, Administration	 	 

-14-<PAGE>

                                                                    EXHIBIT 10.1

                                  May 14, 2004

Mr. Bruce W. Wilkinson
McDermott International, Inc.
757 N. Eldridge Parkway
Houston, TX 77079-4411

                             PERSONAL & CONFIDENTIAL

Re:   Key Executive Retention Program

Dear Mr. Wilkinson:

In order to retain and solidify the dedication and continued efforts of key
executives during this difficult period, the Compensation Committee (the
"Committee") of the Board of Directors of McDermott International, Inc. (the
"Company") has approved the implementation of a Key Executive Retention Program.
I am pleased to advise you that you have been selected for participation in this
program.

The program is designed to provide periodic vesting over the next twelve months
of shares of restricted stock ("Restricted Stock") granted under the 2001
Directors & Officers Long-Term Incentive Plan (the "LTIP") and periodic payments
of cash over that same twelve-month period, provided that you continue to be
employed by the Company or a subsidiary of the Company on each of the applicable
vesting dates.

I.       The Cash Retention Payments

         You will receive periodic cash retention payments which, in the
         aggregate, equal 25% of your annualized base salary on January 1, 2004,
         provided you are employed by the Company or a subsidiary of the Company
         on each of the applicable "Cash Vesting Dates". Each periodic cash
         retention payment shall be paid on or about the applicable Vesting
         Date, in the following gross amounts:

<TABLE>
<CAPTION>
                                      Retention Payment as a Percentage
Vesting Date                          of annualized 1/1/04 Base Salary
------------                          --------------------------------
<S>                                   <C>
May 15, 2004                                         5%
August 15, 2004                                      5%
November 15, 2004                                  7.5%
March 1, 2005                                      7.5%
</TABLE>

         In addition, you may receive a cash retention payment equal to 25% of
         your annualized base salary on January 1, 2004, provided you are
         employed by the Company or a subsidiary of the Company on March 1, 2005
         and the performance measures as shown on the attached Exhibit are met
         (the "Performance-Related Cash Payment"). If the performance measures
         are met, payment will be made as soon as administratively possible
         after March 1, 2005.

II.      The Restricted Stock Retention Award

<PAGE>

         Effective as of May 13, 2004 (the "Grant Date"), the Committee awarded
         to you a grant of 37,143 shares of Restricted Stock under the LTIP.
         Restrictions on 20% of the stock award will be removed on August 15,
         2004, 15% on November 15, 2004 and 15% on March 1, 2005 (the
         "Restricted Stock Vesting Dates"), in each case provided that you are
         employed by the Company or a subsidiary of the Company on the
         applicable Restricted Stock Vesting Date.

         Restrictions on the remaining 50% of the stock award will be removed on
         March 1, 2005, provided that the performance measures as shown on the
         attached Exhibit are met and you continue to be employed by the Company
         or a subsidiary of the Company on that date (the "Performance-Related
         Stock Award"). If the restrictions on the Performance-Related Stock
         Award are not removed because either or both of those conditions are
         not met, all of the shares of Restricted Stock comprising the
         Performance-Related stock Award shall be immediately forfeited.

         On the Grant Date, you will have the right to be issued the total
         number of shares of common stock of the Company shown above.
         Certificates evidencing such shares will be issued in your name,
         subject to the terms and conditions of the LTIP. Beginning on the Grant
         Date, you will have full voting rights with respect to the shares of
         Restricted Stock granted in connection with this award, and you will
         receive cash dividends paid, if any, with respect to those shares (in
         each case, until you forfeit those shares as provided in this Letter
         Agreement or sell those shares after the applicable Restricted Stock
         Vesting Date).

III.     Termination of Employment Prior to Vesting

         Except as provided below, if you terminate employment with the Company
         and all subsidiaries of the Company prior to March 1, 2005, all
         unvested cash retention payments and all unvested shares of Restricted
         Stock issued to you on the Grant Date shall be immediately forfeited.

         If your employment with the Company and all subsidiaries of the Company
         is involuntarily terminated for reasons other than "cause", you will
         continue to be entitled to receive the cash retention payment that
         would have vested on the Cash Vesting Date immediately following your
         termination of employment, payable at the same time and on the same
         basis as if you had remained an employee. In addition, you will vest in
         the shares of Restricted Stock that would have vested on the Restricted
         Stock Vesting Date immediately following your termination of
         employment, at the same time and on the same basis as if you had
         remained an employee. All other unvested cash retention payments and
         unvested shares of Restricted Stock shall be forfeited immediately upon
         such termination of employment. Whether or not a termination of
         employment is for "cause" shall be determined by the Committee, in its
         sole discretion.

         Notwithstanding any other provision of this program, in no event will
         any portion of the Performance-Related Cash Payment or the
         Performance-Related Stock Award be payable if you are not employed by
         the Company or a subsidiary of the Company on March 1, 2005.

         If a Change in Control of the Company occurs (as defined in the LTIP),
         all unvested shares of restricted stock granted hereunder shall
         immediately vest and be freely transferable, and all Cash Vesting Dates
         shall be accelerated and such Cash Retention Payments shall be
         immediately payable.

IV.      Tax Consequences

         Restricted Stock. The Company has been advised that for U.S. federal
         income tax purposes, in the opinion of counsel, as of each Restricted
         Stock Vesting Date, you will be treated as receiving compensation
         taxable as ordinary income equal to the fair market value of the shares
         that vest on that date. Alternatively, you may elect to have the Fair
         Market Value of all of the Restricted Stock included in your taxable
         income and reported on IRS Form W-2 as of the Grant Date.

         In addition, all dividends paid, if any, to you in respect to shares of
         Restricted Stock during the Period of Restriction shall be considered
         wages paid to you by your employer and, therefore, shall be included in
         your taxable income and reported on IRS Form W-2 in the year in which
         the restrictions lapse.

<PAGE>

         By acceptance of this letter, you agree that upon the lapse of the
         restrictions with respect to the shares of Restricted Stock issued to
         you, you will promptly pay to the Company the amount of income tax
         which the Company is required to withhold in connection with the income
         realized by you as a result of such lapse of the restrictions (unless
         you have previously made the election, and paid the tax, referred to
         above). Please note that the Committee has determined that no request
         for the payment of taxes by share withholding will be approved in
         connection with shares of Restricted Stock granted hereunder.

         Cash Retention Payments. For U. S. federal income tax purposes, each
         cash retention payment is taxable to you as wages and reported on IRS
         Form W-2 in the year received.

V.       Securities and Exchange Commission Requirements

         If you are a Section 16 insider, Restricted Stock granted to you
         hereunder must be reported on a Form 4 before the end of the second
         business day following the Grant Date.

         If Section 16 applies to you, you are also subject to Rule 144. This
         Rule is applicable only when the shares are sold, so you need not take
         any action under Rule 144 at this time.

         If you are covered by these requirements, you have already been advised
         of your status. If you become a Section 16 insider at some future date,
         reporting will be required at that time.

         Other Information. If you have any questions concerning any of the
         information set forth above, please do not hesitate to contact L. J.
         Sannino at 281/870-5016.

         Neither the action of the Company in establishing the Key Executive
         Retention Program, nor any action taken by it, by the Committee or the
         Board of Directors in connection with this program, nor any provision
         of this Letter Agreement shall be construed as giving to you the right
         to be retained in the employ of the Company.

         Please acknowledge receipt and acceptance of all of the above by
         signing both this letter and the enclosed copy thereof and returning
         such signed copy to the Company at Post Office Box 61961, New Orleans,
         Louisiana 70161-1961, attention of L. J. Sannino, and marked "Personal
         and Confidential" within 30 days from the date hereof.

                                      Very truly yours,

                                      McDERMOTT INTERNATIONAL, INC.

                                      /s/ Louis J. Sannino
                                      Louis J. Sannino
                                      Senior Vice President, Human Resources and
                                      Corporate Compliance Officer

         LJS/kap
         Attachment

         ACCEPTED:

         ____________________                                    ___________
         Bruce W. Wilkinson                                          Date

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