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EXHIBIT 99(d)(3)
AMENDMENT TO EXECUTIVE OFFICER CHANGE IN CONTROL SEVERANCE
BENEFITS AGREEMENT
This Amendment (the "Amendment") to the Executive Officer
Change in Control Severance Benefits Agreement is entered into this 25th day of
October, 2000, by and among Xxxxx XxXxxx ("Executive"), Continuus Software
Corporation, a Delaware corporation (the "Company"), Telelogic AB, a company
formed under the laws of Sweden ("Telelogic"), and Raindrop Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Telelogic
("Purchaser"). The Company and Executive are parties to the Executive Officer
Change in Control Agreement, dated March 24, 1999 (the "Change in Control
Agreement").
Telelogic, Purchaser and the Company will enter into the
Agreement and Plan of Merger (the "Merger Agreement") dated as of October 25,
2000, pursuant to which Purchaser shall commence a cash tender offer to purchase
all, and in any event not less than a majority on a fully diluted basis, of the
outstanding shares of common stock, par value $0.001 per share ("Common Stock")
of the Company, and pursuant to which Purchaser shall merge into the Company, on
the terms and subject to the conditions set forth in the Merger Agreement. In
order to induce Telelogic and Purchaser to enter into the Merger Agreement and
for other sufficient consideration, the receipt of which is hereby acknowledged,
Executive, the Company, Telelogic and Purchaser hereby agree as follows:
ARTICLE I.
EFFECT OF AMENDMENT
1.1 This Amendment hereby amends the Change in Control
Agreement as of the date hereof. This Amendment shall be part of the Change in
Control Agreement and the terms not otherwise defined in this Amendment shall
have the meanings specified in the Change in Control Agreement.
1.2 This Amendment also hereby amends the Continuus Software
Corporation Restricted Stock Bonus Grant Notice and Restricted Bonus Stock Bonus
Agreement dated August 3, 2000 (collectively, the "Restricted Stock Agreement")
pursuant to which Executive was awarded restricted shares of Common Stock
("Restricted Stock") under the Company's 1997 Equity Incentive Plan.
1.3 This Amendment also hereby amends each Stock Option
Agreement (collectively, the "Stock Option Agreements") pursuant to which
Executive was awarded options ("Options") to purchase shares of Common Stock
under the Company's 1997 Equity Incentive Plan and the Company's 1991 Employee
Stock Option Plan (collectively, the "Stock Option Plans").
1.4 Except as otherwise provided in this Amendment, the Change
in Control Agreement, the Restricted Stock Agreement and the Stock Option
Agreements shall remain in full force and effect in accordance with the terms
and conditions thereof.
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ARTICLE II.
CANCELLATION OF STOCK OPTIONS
2.1 Vested Stock Options. At the "Effective Time" (as defined
in the Merger Agreement), each Option that is exercisable on the date hereof and
outstanding at the "Effective Time" (including any such Option with a per share
purchase price equal to or greater than the "Merger Consideration" (as defined
in the Merger Agreement)) shall be cancelled and the Stock Option Agreements
with respect to such Options shall terminate and have no further force or
effect. At the "Effective Time", the Company shall pay Executive, in
cancellation of each Option that is exercisable on the date hereof and
outstanding at the Effective Time, for each share of Common Stock subject to
such Option, an amount (subject to any applicable withholding tax), in cash,
equal to the difference between the "Merger Consideration" (as defined in the
Merger Agreement) and the per share exercise price of such Option, to the extent
such difference is a positive number. Payment for such Option shall be made by
the Company as soon as practicable after consummation of the "Merger" (as
defined in the Merger Agreement).
2.2 Unvested Stock Options. Notwithstanding the contrary
provisions of the Stock Option Agreements and the Stock Option Plans, each
Option that is not exercisable on the date hereof shall not vest and become
exercisable on or after the date hereof or upon the consummation of the "Offer"
(as defined in the Merger Agreement) or the "Merger" (as defined in the Merger
Agreement). At the "Effective Time" (as defined in the Merger Agreement), each
Option that is not exercisable on the date hereof (including any such Option
with a per share exercise price equal to or greater than the "Merger
Consideration" (as defined in the Merger Agreement)) shall be cancelled and the
Stock Option Agreements with respect to such Options shall terminate and have no
further force and effect. Subject to vesting in accordance with this Section,
the Company shall pay Executive, for each share of Common Stock subject to such
Option, an amount (subject to any applicable withholding tax), in cash, equal to
the difference between the "Merger Consideration" (as defined in the Merger
Agreement) and the per share exercise price of such Option, to the extent such
difference is a positive number (such amount while held in escrow, including
interest thereon, being hereinafter referred to as the "Deferred Option
Consideration"). The Deferred Option Consideration (or portion thereof) shall be
paid by the Escrow Agent (as defined below), to Executive on each vesting date,
provided such Deferred Option Consideration shall have become vested, or to the
Company immediately upon forfeiture, in accordance with this Section. The
Deferred Option Consideration will be deposited by the Company at the Effective
Time into an interest bearing escrow account with an escrow agent (the "Escrow
Agent") reasonably acceptable to the Executive and the Purchaser. In the event
Executive is then employed by the Company, 33% of the Deferred Option
Consideration shall vest on the Closing Date (as defined in the Merger
Agreement), in the event Executive is then employed by the Company, 33% of the
Deferred Option Consideration shall vest on March 31, 2001, and in the event
Executive is then employed by the Company, 34% of the Deferred Option
Consideration shall vest on June 30, 2001; provided, however, that, in the event
Executive's employment with the Company terminates due to an Involuntary
Termination Without Cause or a Constructive Termination, the Deferred Option
Consideration shall thereupon vest in full. In the event Executive's employment
with the Company terminates prior to the vesting of the Deferred Option
Consideration other than due to an Involuntary Termination Without Cause or a
Constructive Termination, the Deferred Option Consideration (or unvested portion
thereof) shall
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be forfeited and Executive's rights thereunder shall terminate, and the unvested
portion of the Deferred Option Consideration shall be paid to the Company.
ARTICLE III.
CANCELLATION OF RESTRICTED STOCK
Notwithstanding the contrary provisions of the Restricted
Stock Agreement and the Stock Option Plans, the Restricted Stock shall not vest
and become exercisable, and the reacquisition and repurchase rights of the
Company shall not lapse, on or after the date hereof or upon the consummation of
the "Offer" (as defined in the Merger Agreement) or the "Merger" (as defined in
the Merger Agreement). At the "Effective Time" (as defined in the Merger
Agreement), the Restricted Stock shall be cancelled and the Restricted Stock
Agreement shall terminate and have no further force and effect. Subject to
vesting in accordance with this Article, the Company shall pay Executive, for
each share of Restricted Stock, an amount (subject to any applicable withholding
tax), in cash, equal to the "Merger Consideration" (as defined in the Merger
Agreement) (such amount while held in escrow, including interest thereon, being
hereinafter referred to as the "Deferred Restricted Stock Consideration"). The
Deferred Restricted Stock Consideration (or a portion thereof) shall be paid by
the Escrow Agent, to Executive on each vesting date, provided such Deferred
Restricted Stock Consideration shall have become vested, or to the Company
immediately upon forfeiture, in accordance with this Article. The Deferred
Restricted Stock Consideration will be deposited by the Company at the
"Effective Time" into an interest bearing escrow account with the Escrow Agent.
In the event Executive is then employed by the Company, 33% of the Deferred
Restricted Stock Consideration shall vest on the Closing Date (as defined in the
Merger Agreement), in the event Executive is then employed by the Company, 33%
of the Deferred Restricted Stock Consideration shall vest on March 31, 2001, and
in the event Executive is then employed by the Company, the remaining 34% of the
Deferred Restricted Stock Consideration shall vest on June 30, 2001; provided,
however, that, in the event Executive's employment with the Company terminates
due to an Involuntary Termination Without Cause or a Constructive Termination,
the Deferred Restricted Stock Consideration shall thereupon vest in full. Any
taxes required to be withheld with respect to the Deferred Restricted Stock
Consideration shall be withheld and remitted by the Escrow Agent. In the event
that Executive's employment with the Company terminates prior to the vesting of
the Deferred Restricted Stock Consideration other than due to an Involuntary
Termination Without Cause or a Constructive Termination, the Deferred Restricted
Stock Consideration shall thereupon be forfeited and Executive's rights
thereunder shall terminate, and the unvested Deferred Restricted Stock
Consideration shall be paid to the Company.
ARTICLE IV.
NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION AGREEMENTS
4.1 Non-Compete. For a period of two (2) years commencing at
the "Effective Time" (as defined in the Merger Agreement), Executive shall not,
directly or indirectly, own, manage, operate, join, control or participate in
the ownership, management, operation or control of, or be connected as a
director, officer, employee, partner, consultant or otherwise with, any profit
or nonprofit business or organization which competes with, or in any
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way interferes with, the "Business of the Company" or any of its affiliates in
any region in which the Company is then operating or has firm plans to operate.
"Business of the Company" shall mean any research, development, application or
other activity related to the actual or anticipated business of the Company (or
any business or entity which has been acquired by the Company), or any research,
development, application or other activity related to any product, service,
device or tool being marketed or under development by the Company or which is
suggested by or results from any works performed by Executive for or on behalf
of the Company.
4.2 Confidentiality. Executive shall not at any time either
during the Executive's employment or thereafter for a period of ten (10) years,
disclose or make available to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever, any Confidential Information
(as defined below). Executive agrees that, upon termination of Executive's
employment with the Company, all Confidential Information in Executive's
possession that is in written or other tangible form (together with all copies
or duplicates thereof, including computer files) shall be returned to the
Company and shall not be retained by Executive or furnished to any third party,
in any form except as provided herein; provided, however, that Executive shall
not be obligated to treat as confidential, or return to the Company copies of
any Confidential Information that (i) was publicly known at the time of
disclosure to Executive, (ii) becomes publicly known or available thereafter
other than by any means in violation of this Amendment or any other duty owed to
the Company by any person or entity, or (iii) is lawfully disclosed to Executive
by a third party. As used in this Amendment, the term "Confidential Information"
means: information disclosed to Executive or known by Executive as a consequence
of or through Executive's relationship with the Company, about the customers,
employees, products, services, business methods, public relations methods,
organization, procedures or finances, including, without limitation, information
of or relating to customer lists, of the Company and its affiliates.
4.3 Non-Solicitation. For the period of two (2) years
commencing on the date of the termination of Executive's employment with the
Company, Executive shall not, either on Executive's own account or jointly with
or as a manager, agent, officer, employee, consultant, partner, joint venturer,
owner or shareholder or otherwise on behalf of any other person, firm or
corporation, solicit or attempt to solicit away from the Company any of its
officers or employees or offer employment to any person who, on or during the
two (2) months immediately preceding the date of such solicitation or offer, is
or was an officer or employee of the Company; provided, however, that a general
advertisement to which an employee of the Company responds shall in no event be
deemed to result in a breach of this Section.
4.4 Breach of Covenants. In the event that Executive breaches
any of the provisions of this Article, or threaten to do so, in addition to and
without limiting or waiving any other remedies available to the Company in law
or in equity, the Company shall be entitled to immediate injunctive relief in
any court having the capacity to grant such relief, to restrain such breach or
threatened breach and to enforce this Article. Executive acknowledge that it is
impossible to measure in money the damages that the Company will sustain in the
event that Executive breaches or threatens to breach this Article and, in the
event that the Company institutes any action or proceeding to enforce this
Article seeking injunctive relief, Executive hereby waives and agrees not to
assert or use as a defense a claim or defense that the Company has an adequate
remedy at law. Also, in addition to any other remedies available to the
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Company in law or in equity, in the event that Executive breaches the provisions
of this Article in any material respect, Executive shall forfeit Executive's
rights to further benefits under this Amendment and the Change in Control
Agreement. If a court or arbitrator shall hold that the duration, scope or area
restriction or other provision of this Article is unreasonable under the
circumstances now or then existing, the parties hereto agree that the maximum
duration, scope or area restriction reasonable under the circumstances shall be
substituted for the stated duration, scope or area restriction.
ARTICLE V.
DEFINITION OF CONSTRUCTIVE TERMINATION
5.1 The consummation of the "Offer" (as defined in the Merger
Agreement) will constitute a "Change in Control" pursuant to Section 5.3 of the
Change in Control Agreement.
5.2 Changes in Executive's duties or responsibilities which
result in a diminution or adverse change of Executive's position, status or
circumstances shall not constitute an event described in Section 5.6(a) of the
Change in Control Agreement, as long as such changes take place prior to June
30, 2001.
5.3 To the extent that the consummation of the Offer, the
"Merger" (as defined in the Merger Agreement) and the transactions contemplated
by the Merger Agreement, or the termination of the Company's 1991 Employee Stock
Option Plan, the Company's 1997 Equity Incentive Plan or the Company's 1999
Employee Stock Purchase Plan, would constitute an event described in Section 5.6
of the Change in Control Agreement, Executive hereby expressly consents to such
event and agrees that, absent another event described therein, any voluntary
termination by Executive shall not constitute a "Constructive Termination," as
defined in the Change in Control Agreement.
ARTICLE VI.
ADDITIONAL COMPENSATION
Executive shall be guaranteed 50% of his target bonus for the
first six months of 2001, to be paid on June 30, 2001 (the "Guaranteed Bonus"),
provided however, if Executive shall fail to be an employee of the Company on
June 30, 2001 other than due to an Involuntary Termination Without Cause or a
Constructive Termination, then the right to receive such Guaranteed Bonus shall
be forfeited in whole, without any rights of partial payment.
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IN WITNESS WHEREOF, the parties have executed this Amendment
on the day and year written above.
CONTINUUS SOFTWARE CORPORATION EXECUTIVE
By: /s/ XXXX X. XXXX
--------------------------------------------- /s/ XXXXX XXXXXX
Name: Xxxx X. Xxxx -------------------------------------------
Title: President, Chief Executive Officer and
Chairman of the Board
TELELOGIC AB RAINDROP ACQUISITION CORPORATION
By: /s/ XXXXXX XXXXXXX By: /s/ XXXXXX XXXXXXX
--------------------------------------------- ----------------------------------------
Name: Xxxxxx Xxxxxxx Name: Xxxxxx Xxxxxxx
Title: President and Chief Executive Officer Title: President and Chief Executive Officer
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