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EXHIBIT 99(d)(7)
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 as of October 25, 2000, by
and among Steve Johnson ("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 December 4, 1998 (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 such 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 each such Option, to the
extent that the Merger Consideration per share exceeds the per share exercise
price of each such Option. Payment for each 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 that the Merger
Consideration per share exceeds the per share exercise price of each such Option
(such amount while held in escrow, including interest thereon, being hereinafter
referred to as the "Deferred Option Consideration"). The Deferred Option
Consideration shall be paid by the Escrow Agent (as defined below), to Executive
on the 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, 100% of the
Deferred Option Consideration shall vest on January 31, 2001; provided, however,
that, in the event Executive's employment with the Company terminates, prior to
January 31, 2001, 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 be forfeited
and Executive's rights thereunder shall terminate, and the unvested portion of
the Deferred Option Consideration shall be paid to the Company.
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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 to 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 shall be paid by the Escrow Agent, to Executive
on the 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,
100% of the Deferred Restricted Stock Consideration shall vest on January 31,
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 one (1) year commencing at the
"Effective Time" (as defined in the Merger Agreement), Executive shall not,
directly or indirectly, own (other than a less than 5% interest thereof),
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 of the following companies: iLogix,
Artisan, Mercury Interactive, Segue Software, Integrated Chipware, Rational,
Merant and Starbase.
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
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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 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.
4.5 The Company, Telelogic, Purchaser and Executive agree that $200,000
of the total amount payable to Executive pursuant to Articles II and III herein
and pursuant to Executive's Change in Control Agreement are allocable to the
covenants of Executive set forth in this Article IV; provided, however, that
such agreement shall not be considered a warranty by any party with regard to
such allocation.
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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 January 31, 2001;
provided, however, that if such changes take place prior to January 31, 2001,
then such changes shall, immediately after January 31, 2001, constitute an event
described in Section 5.6(a) of the Change in Control Agreement.
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, prior to January 31, 2001 and because of such event, shall not
constitute a "Constructive Termination," as defined in the Change in Control
Agreement.
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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/ JOHN R. WARK /s/ STEVE JOHNSON
------------------------------------- -----------------------------------
Name: John R. Wark
Title: President, Chief Executive Officer
and Chairman of the Board
TELELOGIC AB RAINDROP ACQUISITION CORPORATION
By: /s/ ANDERS LIDBECK By: /s/ ANDERS LIDBECK
-------------------------------------- -------------------------------
Name: Anders Lidbeck Name: Anders Lidbeck
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
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