1
EXHIBIT 14
CONTINUUS SOFTWARE CORPORATION
1997 EQUITY INCENTIVE PLAN
RESTRICTED STOCK BONUS AGREEMENT
Pursuant to the Restricted Stock Bonus Grant Notice ("Grant Notice") and
this Restricted Stock Bonus Agreement (collectively, the "Award") and the par
value of which is in consideration of your past services, Continuus Software
Corporation (the "Company") has awarded you a stock bonus under its 1997 Equity
Incentive Plan (the "Plan") for the number of shares of the Company's Common
Stock subject to the Award as indicated in the Grant Notice. Defined terms not
explicitly defined in this Restricted Stock Bonus Agreement but defined in the
Plan shall have the same definitions as in the Plan.
The details of your Award are as follows:
1. VESTING. Subject to the limitations contained herein and the Plan, your
Award will vest as provided in the Grant Notice.
(A) SPECIAL ACCELERATION PROVISIONS. Notwithstanding any other
provisions of the Plan to the contrary, in the event of a Change in
Ownership, then the vesting and exercisability of your Award shall be
accelerated in full and any reacquisition or repurchase rights held by the
Company with respect to Common Stock acquired pursuant to your Award shall
lapse in full, as appropriate.
For purposes of this subsection 1(a) only, "Change in Ownership" means: (i)
a sale, exchange, lease or other disposition of all or substantially all of the
assets of the Company; (ii) a merger or consolidation involving the Company or a
subsidiary (within the meaning of Rule 405 promulgated under the Securities Act,
or comparable successor rule) of the Company, in which the Company is not the
surviving entity and in which the stockholders of the Company immediately prior
to such consolidation or merger own less than fifty percent (50%) of the
surviving entity's voting power immediately after the transaction or, if the
surviving entity is a majority-owned subsidiary (within the meaning of Rule 405
promulgated under the Securities Act, or comparable successor rule) of another
entity, less than fifty percent (50%) of the voting power of the surviving
entity's parent (within the meaning of Rule 405 promulgated under the Securities
Act, or comparable successor rule) immediately after the transaction; (iii) a
reverse merger in which the Company is the surviving entity but the shares of
Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, and in which the stockholders of the Company immediately
prior to such reverse merger own less than fifty percent (50%) of the Company's
voting power immediately after the transaction; (iv) an acquisition by any
person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act, or any comparable successor provisions (excluding any employee
benefit plan, or related trust, sponsored or maintained by the Company or
subsidiary of the Company or other entity controlled by the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the voting power entitled to vote
in the election of Directors; or (v) in the event that less than a majority of
the members of the Board of Directors are Incumbent Directors. For purposes of
this Award, "Incumbent Directors" are individuals who as of the date of this
Award are members of the Board of Directors and any new director who is elected
or nominated for election by the Company's stockholders by at least fifty
percent (50%) of the Incumbent Directors, provided that Incumbent Directors, at
the time of the election or nomination, constitute a majority of the Board of
Directors.
(B) PARACHUTE PAYMENTS. In the event that the acceleration of the
vesting and exercisability of your Award and the lapse of reacquisition or
repurchase rights with respect to Common Stock acquired pursuant to your
Award provided for in subsection 1(a) and benefits otherwise payable to you
(i) constitute "parachute payments" within the meaning of Section 280G of
the Code, or any comparable successor provisions, and (ii) but for this
subsection would be subject to the excise tax imposed by
2
Section 4999 of the Code, or any comparable successor provisions (the
"Excise Tax"), then your benefits hereunder shall be either
(i) provided to you in full, or
(ii) provided to you as to such lesser extent which would result in
no portion of such benefits being subject to the Excise Tax,
whichever of the foregoing amounts, when taking into account applicable
federal, state, local and foreign income and employment taxes, the Excise
Tax, and any other applicable taxes, results in the receipt by you, on an
after-tax basis, of the greatest amount of benefits, notwithstanding that
all or some portion of such benefits may be taxable under the Excise Tax.
Unless the Company and you otherwise agree in writing, any determination
required under this subsection shall be made in writing in good faith by a
qualified third party (the "Professional Service Firm"). In the event of a
reduction of benefits hereunder, you shall be given the choice of which
benefits to reduce. For purposes of making the calculations required by
this subsection, the Professional Service Firm may make reasonable
assumptions and approximations concerning applicable taxes and may rely on
reasonable, good faith interpretations concerning the application of the
Code, and other applicable legal authority. The Company and you shall
furnish to the Professional Service Firm such information and documents as
the Professional Service Firm may reasonably request in order to make a
determination under this subsection. The Company shall bear all costs the
Professional Service Firm may reasonably incur in connection with any
calculations contemplated by this subsection.
If, notwithstanding any reduction described in this subsection, the
IRS determines that you are liable for the Excise Tax as a result of the
receipt of the payment of benefits as described above, then you shall be
obligated to pay back to the Company, within thirty (30) days after a final
IRS determination or in the event that you challenge the final IRS
determination, a final judicial determination, a portion of the payment
equal to the "Repayment Amount." The Repayment Amount with respect to the
payment of benefits shall be the smallest such amount, if any, as shall be
required to be paid to the Company so that your net after-tax proceeds with
respect to any payment of benefits (after taking into account the payment
of the Excise Tax and all other applicable taxes imposed on such payment)
shall be maximized. The Repayment Amount with respect to the payment of
benefits shall be zero if a Repayment Amount of more than zero would not
result in your net after-tax proceeds with respect to the payment of such
benefits being maximized. If the Excise Tax is not eliminated pursuant to
this paragraph, you shall pay the Excise Tax.
Notwithstanding any other provision of this subsection 1(b), if (i)
there is a reduction in the payment of benefits as described in this
subsection, (ii) the IRS later determines that you are liable for the
Excise Tax, the payment of which would result in the maximization of your
net after-tax proceeds (calculated as if your benefits had not previously
been reduced), and (iii) you pay the Excise Tax, then the Company shall pay
to you those benefits which were reduced pursuant to this subsection
contemporaneously or as soon as administratively possible after you pay the
Excise Tax so that your net after-tax proceeds with respect to the payment
of benefits is maximized.
If you either (i) bring any action to enforce rights pursuant to this
Section 1, or (ii) defend any legal challenge to your rights hereunder, you
shall be entitled to recover attorneys' fees and costs incurred in connection
with such action, regardless of the outcome of such action; provided, however,
that in the event such action is commenced by you, the court finds the claim was
brought in good faith.
2. NUMBER OF SHARES. The number of shares subject to your Award may be
adjusted from time to time for capitalization adjustments, as described in
subsection 12(a) of the Plan.
3. SECURITIES LAW COMPLIANCE. You may not be issued any shares under your
Award unless the shares are either (i) then registered under the Securities Act
or (ii) the Company has determined that such issuance would be exempt from the
registration requirements of the Securities Act. Your Award must also comply
with other applicable laws and regulations governing the Award, and you will not
receive such shares if the Company determines that such receipt would not be in
material compliance with such laws and regulations.
3
4. RIGHT OF REACQUISITION. The Company shall have the right to reacquire
the shares you received pursuant to your Award that have not vested as of the
date the Company exercises its Reacquisition Right under this Section 4 in
accordance with the vesting provisions of the Award and the Plan (the "Unvested
Shares") on the following terms and conditions:
(a) The Company shall, simultaneously with termination of your
Continuous Service (as defined in the Plan), automatically reacquire for no
consideration all of the Unvested Shares, unless the Company agrees to
waive its reacquisition right as to some or all of the Unvested Shares
("Reacquisition Right"). Any such waiver shall be exercised by the Company
by written notice to you or your representative (with a copy to the Escrow
Holder as defined below) in accordance with Section 9 herein within ninety
(90) days after the termination of your Continuous Service, and the Escrow
Holder may then release to you the number of Unvested Shares not being
reacquired by the Company. If the Company does not waive its reacquisition
right as to all of the Unvested Shares, then upon such termination of your
Continuous Service, the Escrow Holder shall transfer to the Company the
number of shares the Company is reacquiring.
(b) The shares issued under your Award shall be held in escrow
pursuant to the terms of the Joint Escrow Instructions attached to the
Grant Notice as Attachment IV. You agree to execute three (3) Assignment
Separate From Certificate forms (with date and number of shares blank)
substantially in the form attached to the Grant Notice as Attachment III
and deliver the same, along with the certificate or certificates evidencing
the shares, for use by the escrow agent (the "Escrow Holder").
(c) Subject to the provisions of your Award and the Plan, you shall,
during the term of your Award, possess all rights and privileges of a
stockholder of the Company with respect to the shares deposited in escrow.
You shall be deemed to be the holder of the shares for purposes of
receiving any dividends which may be paid with respect to such shares and
for purposes of exercising any voting rights relating to such shares, even
if some or all of such shares have not yet vested and been released from
the Company's Reacquisition Right.
(d) If, from time to time, there is any stock dividend, stock split or
other change in the character or amount of any of the outstanding stock of
the corporation the stock of which is then subject to the provisions of
your Award (including a capital adjustment as described in subsection 12(a)
of the Plan), then in such event any and all new, substituted or additional
securities to which you are entitled by reason of your ownership of the
shares acquired under your Award shall be immediately subject to the
Reacquisition Right with the same force and effect as the shares subject to
this Reacquisition Right immediately before such event.
5. RESTRICTIVE LEGENDS. The shares issued under your Award shall be
endorsed with appropriate legends determined by the Company.
6. AWARD NOT A SERVICE CONTRACT. Your Award is not an employment or
service contract, and nothing in your Award shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or any obligation on the part of the Company or an Affiliate to
continue your employment. In addition, nothing in your Award shall obligate the
Company or an Affiliate, their respective stockholders, boards of directors,
Officers or Employees to continue any relationship that you might have as a
Director or Consultant for the Company or an Affiliate.
7. WITHHOLDING OBLIGATIONS.
(a) At the time your Award is made, at the time that some or all of
the shares subject to your Award became vested, or at any time thereafter
as requested by the Company, you hereby authorize withholding from payroll
and any other amounts payable to you, and otherwise agree to make adequate
provision for any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company or an Affiliate, if any,
which arise in connection with your Award.
4
(b) Unless the tax withholding obligations of the Company and/or any
Affiliate are satisfied, the Company shall have no obligation to issue a
certificate for such shares or approve the release of such shares from any
escrow provided for herein.
8. FEDERAL TAX CONSEQUENCES. The acquisition and vesting of the shares may
have adverse tax consequences to you that may be avoided or mitigated by filing
an election under Section 83(b) of the Internal Revenue Code, as amended (the
"Code"). Such election must be filed within thirty (30) days after the date of
your Award. YOU ACKNOWLEDGE THAT IT IS YOUR OWN RESPONSIBILITY, AND NOT THE
COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF YOU
REQUEST THE COMPANY TO MAKE THE FILING ON YOUR BEHALF.
9. NOTICES. Any notices provided for in your Award or the Plan shall be
given in writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.
10. MISCELLANEOUS.
(a) The rights and obligations of the Company under your Award shall
be transferable to any one or more persons or entities, and all covenants
and agreements hereunder shall inure to the benefit of, and be enforceable
by the Company's successors and assigns. Your rights and obligations under
your Award may only be assigned with the prior written consent of the
Company.
(b) You agree upon request to execute any further documents or
instruments necessary or desirable in the sole determination of the Company
to carry out the purposes or intent of your Award.
(c) You acknowledge and agree that you have reviewed your Award in its
entirety, have had an opportunity to obtain the advice of counsel prior to
executing and accepting your Award, and fully understand all provisions of
your Award.
11. GOVERNING PLAN DOCUMENT. Your Award is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your Award, and
is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of your Award and those of the
Plan, the provisions of the Plan shall control.
12. CHOICE OF LAW. The laws of the State of California shall govern all
questions concerning the construction, validity and interpretation of this
Award, without regard to such state's conflict of laws rules.
5
JOINT ESCROW INSTRUCTIONS
August 3, 2000
Corporate Secretary
Continuus Software Corporation
000 Xxxxxxxx, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Dear Sir/Madam:
As Escrow Agent for both Continuus Software Corporation, a Delaware
corporation (the "Company"), and the undersigned recipient of stock of the
Company ("Recipient"), you are hereby authorized and directed to hold the
documents delivered to you pursuant to the terms of that certain Restricted
Stock Bonus Grant Notice (the "Grant Notice"), dated August 3, 2000 to which a
copy of these Joint Escrow Instructions is attached as Attachment IV, and
pursuant to the terms of that certain Restricted Stock Bonus Agreement
("Agreement"), which is Attachment I to the Grant Notice, in accordance with the
following instructions:
1. In the event Recipient ceases to render services to the Company or
an affiliate of the Company during the vesting period set forth in the
Grant Notice, the Company or its assignee will give to Recipient and you a
written notice specifying that the shares of stock shall be transferred to
the Company. Recipient and the Company hereby irrevocably authorize and
direct you to close the transaction contemplated by such notice in
accordance with the terms of said notice.
2. At the closing you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company.
3. Recipient irrevocably authorizes the Company to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and
any additions and substitutions to said shares as specified in the
Agreement. Recipient does hereby irrevocably constitute and appoint you as
Recipient's attorney-in-fact and agent for the term of this escrow to
execute with respect to such securities and other property all documents of
assignment and/or transfer and all stock certificates necessary or
appropriate to make all securities negotiable and complete any transaction
herein contemplated.
4. This escrow shall terminate upon vesting of the shares or upon the
earlier return of the shares to the Company or the Company's written waiver
of its Reacquisition Right in its entirety.
5. If at the time of termination of this escrow you should have in
your possession any documents, securities, or other property belonging to
Recipient, you shall deliver all of same to any pledgee entitled thereto
or, if none, to Recipient and shall be discharged of all further
obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed by
you to be genuine and to have been signed or presented by the proper party
or parties or their assignees. You shall not be personally liable for any
act you may do or omit to do hereunder as Escrow Agent or as
attorney-in-fact for Recipient while acting in good faith and any act done
or omitted by you pursuant to the advice of your own attorneys shall be
conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law, and are
hereby expressly authorized to comply with and obey orders, judgments or
decrees of any court. In case you obey or comply with any such order,
judgment or decree of any court, you shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of
such compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.
6
9. You shall not be liable in any respect on account of the identity,
authority or rights of the parties executing or delivering or purporting to
execute or deliver the Grant Notice or any documents or papers deposited or
called for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or
any documents deposited with you.
11. You shall be entitled to employ such legal counsel, including but
not limited to Xxxxxx Godward LLP, and other experts as you may deem
necessary properly to advise you in connection with your obligations
hereunder, may rely upon the advice of such counsel, and may pay such
counsel reasonable compensation therefor.
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by
written notice to each party. In the event of any such termination, the
Company may appoint any officer or assistant officer of the Company as
successor Xxxxxx Agent and Recipient hereby confirms the appointment of
such successor or successors as his attorney-in-fact and agent to the full
extent of your appointment.
13. If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such
instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, you may (but are not obligated to) retain in your possession
without liability to anyone all or any part of said securities until such
dispute shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal
has been perfected, but you shall be under no duty whatsoever to institute
or defend any such proceedings.
15. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or
upon deposit in any United States Post Box, by registered or certified mail
with postage and fees prepaid, addressed to each of the other parties
hereunto entitled at the following addresses, or at such other addresses as
a party may designate by ten (10) days' written notice to each of the other
parties hereto:
Company: Continuus Software Corporation
000 Xxxxxxxx, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
Recipient: ---------------------------
---------------------------
---------------------------
---------------------------
Continuus Software Corporation
000 Xxxxxxxx, Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Secretary
Escrow Agent:
16. By signing these Joint Escrow Instructions you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not
become a party to the Grant Notice.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
It is understood and agreed that references to "you" or "your" herein refer
to the original Escrow Agent and to any and all successor Escrow Agents. It
is
7
understood and agreed that the Company may at any time or from time to time
assign its rights under the Grant Notice, the Agreement and these Joint
Escrow Instructions in whole or in part.
Very truly yours,
Continuus Software Corporation
By:
------------------------------------
Recipient
--------------------------------------
Escrow Agent:
---------------------------------------------------------
Corporate Secretary
