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EXHIBIT 10.13
EXECUTIVE CHANGE IN CONTROL
SEVERANCE BENEFITS AGREEMENT
THIS EXECUTIVE CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT (the
"AGREEMENT") is entered into this ____ day of _____________, 19___ between
_____________________ ("EXECUTIVE") and CONTINUUS SOFTWARE CORPORATION, a
California corporation (the "COMPANY"). This Agreement is intended to provide
Executive with the compensation and benefits described herein upon the
occurrence of specific events. Certain capitalized terms used in this Agreement
are defined in Article V.
The Company and Executive hereby agree as follows:
ARTICLE I
Employment by the Company
1.1 Executive is currently employed by the Company.
1.2 The Company and Executive wish to set forth the compensation and
benefits which Executive shall be entitled to receive in the event Executive's
employment with the Company is terminated in connection with a Change in Control
of the Company under the circumstances described herein.
1.3 The duties and obligations of the Company to Executive under this
Agreement shall be in consideration for Executive's past services to the
Company, Executive's continued employment with the Company and Executive's
execution of the general waiver and release described in Section 3.2.
1.4 This Agreement shall remain in full force and effect so long as
Executive is employed by the Company; provided, however, that Executive's rights
to payments and benefits under Article II shall continue until the Company's
obligation to provide such payments and benefits is satisfied.
1.5 This Agreement shall supersede any other agreement relating to
Executive's employment or severance in connection with a Change in Control of
the Company.
ARTICLE II
SEVERANCE BENEFITS UPON CHANGE IN CONTROL
2.1 SEVERANCE BENEFITS. If Executive's employment terminates due to an
Involuntary Termination Without Cause or a Constructive Termination at any time
after the date of execution of this Agreement and within thirteen (13) months of
a Change in Control of the Company, such termination of employment will be
deemed a Covered Termination. A Covered Termination entitles Executive to
receive the following benefits set forth in Sections 2.2 through 2.5 inclusive.
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2.2 BASE SALARY CONTINUATION. In the sole discretion of Executive,
Executive shall receive continuation of his or her Base Salary for either six
(6) months or nine (9) months following the date of a Covered Termination. If
Executive elects to receive six (6) months Base Salary continuation, then (A)
Executive's target bonus payment shall be determined in accordance with Section
2.3(b) of this Agreement and (B) Executive's stock options shall accelerate in
accordance with the provisions of Section 2.4(b) of this Agreement; whereas if
Executive elects to receive nine (9) months Base Salary continuation, then (X)
Executive's target bonus payment shall be determined in accordance with Section
2.3(a) of this Agreement and (Y) Executive's stock options shall accelerate in
accordance with the provisions of Section 2.4(a) of this Agreement. Without
regard to the length of such Base Salary continuation, such salary continuation
payments shall be made in accordance with standard Company payroll practices or
such shorter period as determined by the Company in its sole discretion.
2.3 TARGET BONUS. Payment shall be made within thirty (30) days
following the Covered Termination in accordance with the following:
(a) In the event Executive elects to receive nine (9) months Base
Salary continuation in accordance with the provision of Section 2.2 of this
Agreement, then Executive shall receive nine-twelfths (9/12) of his or her
annual bonus, determined with reference to any bonus plan of the Company then in
effect, or, if no bonus plan is then in effect, with reference to Executive's
offer letter to join the Company.
(b) In the event Executive elects to receive six (6) months Base
Salary continuation in accordance with the provision of Section 2.2 of this
Agreement, then Executive shall receive six-twelfths (6/12) of his or her annual
bonus, determined with reference to any bonus plan of the Company then in
effect, or, if no bonus plan is then in effect, with reference to Executive's
offer letter to join the Company.
2.4 ACCELERATION OF STOCK OPTION VESTING.
(a) In the event Executive elects to receive nine (9) months Base
Salary continuation in accordance with the provision of Section 2.2 of this
Agreement, then notwithstanding the language in Executive's option agreement(s)
or any other language to the contrary, the vesting of Executive's stock
option(s) shall accelerate and immediately become vested and exercisable with
respect to those option shares which would have vested if Executive had
continued to render services to the Company for eighteen (18) months following
the date of Executive's Covered Termination.
(b) In the event Executive elects to receive six (6) months Base
Salary continuation in accordance with the provision of Section 2.2 of this
Agreement, then notwithstanding the language in Executive's option agreement(s)
or any other language to the contrary, the vesting of Executive's stock
option(s) shall accelerate and immediately become vested and exercisable with
respect to those option shares which would have vested if Executive had
continued to render services to the Company for twenty-four (24) months
following the date of Executive's Covered Termination.
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2.5 COBRA CONTINUATION. Executive and Executive's covered dependents
will be eligible to continue their health care benefit coverage as permitted by
COBRA (Internal Revenue Code Section 4980B) at no cost to Executive for the six
(6) or nine (9)-month period in which Executive elected to receive Base Salary
continuation; provided, however, that payment of such COBRA premiums by the
Company shall cease upon Executive commencing employment with a new employer
which provides comparable benefits to Executive and Executive's covered
dependents. Nothing in this Section is intended to limit the availability of
COBRA to Executive (subject to Executive paying all associated premiums and
costs) beyond the six (6) or nine (9)-month period, respectively, following
Executive's Covered Termination.
2.6 MITIGATION. Except as otherwise specifically provided herein,
Executive shall not be required to mitigate damages or the amount of any payment
provided under this Agreement by seeking other employment or otherwise, nor
shall the amount of any payment provided for under this Agreement be reduced by
any compensation earned by Executive as a result of employment by another
employer or by any retirement benefits received by Executive after the date of
the Covered Termination, or otherwise.
ARTICLE III
LIMITATIONS AND CONDITIONS ON BENEFITS
3.1 WITHHOLDING OF TAXES. The Company shall withhold appropriate
federal, state, local (and foreign, if applicable) income and employment taxes
from any payments hereunder.
3.2 EMPLOYEE AGREEMENT AND RELEASE PRIOR TO RECEIPT OF BENEFITS. Upon
the occurrence of a Covered Termination, and prior to the receipt of any
benefits under this Agreement on account of such Covered Termination, Executive
shall execute the Employee Agreement and Release (the "Release") in the form
attached hereto as Exhibit A. Such Release shall specifically relate to all of
Executive's rights and claims in existence at the time of such execution and
shall confirm Executive's obligations under the Company's standard form of
proprietary information and inventions agreement. It is understood that
Executive has twenty-one (21) days to consider whether to execute such Release,
and Executive may revoke such Release within seven (7) business days after
execution. In the event Executive does not execute such Release within the
twenty-one (21)-day period, or if Executive revokes such Release within the
subsequent seven (7)-business day period, no benefits shall be payable under
this Agreement and this Agreement shall be null and void.
ARTICLE IV
OTHER RIGHTS AND BENEFITS
4.1 NONEXCLUSIVITY. Nothing in the Agreement shall prevent or limit
Executive's continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices provided by the Company and for
which Executive may otherwise qualify, nor shall anything herein limit or
otherwise affect such rights as Executive may have under other agreements with
the Company. Except as otherwise expressly provided herein, amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy,
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practice or program of the Company at or subsequent to the date of a Covered
Termination shall be payable in accordance with such plan, policy, practice or
program.
4.2 PARACHUTE PAYMENTS. In the event that any amount or benefit received
or to be received by Executive pursuant to this Agreement would constitute an
"excess parachute payment" subject to excise tax under Internal Revenue Code
Section 4999, such amount or benefit may be reduced, in the order of priority
set forth below, so that after such reduction, if any, Executive receives the
largest after-tax payment:
(a) first, the Target Bonus (as set forth in Section 2.3 of this
Agreement), shall be reduced;
(b) then, the continuation of Base Salary (as set forth in
Section 2.2 of this Agreement) shall next be reduced; and
(c) finally, the acceleration of stock options (as set forth in
Section 2.4 of this Agreement) shall be reduced.
ARTICLE V
DEFINITIONS
For purposes of the Agreement, the following terms are defined as
follows:
5.1 "BASE SALARY" means Executive's annual base salary in effect during
the last regularly scheduled payroll period immediately preceding any
termination of Executive's employment.
5.2 "CAUSE" means termination of Executive's employment with the Company
for any of the following reasons as determined in good faith by the Company (or
in the case of the CEO, a majority of the Board) which is not cured within
fifteen (15) days following delivery of written notice of such infraction to
Executive:
(a) an intentional act which materially injures the Company;
(b) an intentional refusal or failure to follow lawful and
reasonable directions of the Board or an individual to whom participant reports
(as appropriate);
(c) a willful and habitual neglect of duties; or
(d) a conviction of a felony involving moral turpitude which is
reasonably likely to inflict or has inflicted material injury on the Company.
5.3 "CHANGE IN CONTROL" (1) a sale of all or substantially all of the
assets of the Company; (2) a merger or consolidation in which the Company is not
the surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's 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; or
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(4) the acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any comparable successor provisions (excluding any employee benefit
plan, or related trust, sponsored or maintained by the Company or any Affiliate
of 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 combined voting
power entitled to vote in the election of directors.
5.4 "COVERED TERMINATION" means an Involuntary Termination Without Cause
or a Constructive Termination within thirteen (13) months of a Change in
Control.
5.5 "INVOLUNTARY TERMINATION WITHOUT CAUSE" means Executive's dismissal
or discharge other than for Cause. The termination of Executive's employment as
a result of Executive's death or disability will not be deemed to be an
Involuntary Termination Without Cause.
5.6 "CONSTRUCTIVE TERMINATION" means that Executive voluntarily
terminates employment after any of the following are undertaken without
Executive's express written consent:
(a) the assignment to Executive of any duties or responsibilities
which result in a diminution or adverse change of Executive's position, status
or circumstances of employment; provided, however, that a mere change in
Executive's title or reporting relationship shall not constitute a Constructive
Termination;
(b) a reduction by the Company in Executive's Base Salary;
(c) any failure by the Company to continue in effect any benefit
plan or arrangement, including incentive plans or plans to receive securities of
the Company, in which Executive is participating (hereinafter referred to as
"Benefit Plans"), or the taking of any action by the Company which would
adversely affect Executive's participation in or reduce Executive's benefits
under any Benefit Plans or deprive Executive of any fringe benefit then enjoyed
by Executive, provided, however, that Executive's termination is not deemed a
Constructive Termination if the Company offers a range of benefit plans and
programs which, taken as a whole, are comparable to the Benefit Plans, as
determined in good faith by the Executive;
(d) a relocation of Executive or the Company's principal business
offices to a location more than thirty (30) miles from the location at which
Executive performs duties, except for required travel by Executive on the
Company's business to an extent substantially consistent with Executive's
business travel obligations;
(e) any breach by the Company of any provision of this Agreement
or any other material agreement between Executive and the Company concerning
Executive's employment; or
(f) any failure by the Company to obtain the assumption of this
Agreement or any other material agreement between Executive and the Company
concerning Executive's employment by any successor or assign of the Company.
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ARTICLE VI
GENERAL PROVISIONS
6.1 EMPLOYMENT STATUS. This Agreement does not constitute a contract of
employment or impose upon Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company's policies regarding termination of employment.
6.2 NOTICES. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by facsimile) or the
third day after mailing by first class mail, to the Company at its primary
office location and to Executive at Executive's address as listed in the
Company's payroll records. Any payments made by the Company to Executive under
the terms of this Agreement shall be delivered to Executive either in person or
at the address as listed in the Company's payroll records.
6.3 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.
6.4 WAIVER. If either party should waive any breach of any provisions of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
6.5 ARBITRATION. Unless otherwise prohibited by law or specified below,
all disputes, claims and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by final and binding
arbitration held in Santa Ana, California through Judicial Arbitration &
Mediation Services/Endispute ("JAMS") under the then existing JAMS arbitration
rules. However, nothing in this section is intended to prevent either party from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. Each party in any such arbitration shall be
responsible for its own attorneys fees, costs and necessary disbursement;
provided, however, that in the event one party refuses to arbitrate and the
other party seeks to compel arbitration by court order, if such other party
prevails, it shall be entitled to recover reasonable attorneys fees, costs and
necessary disbursements. Pursuant to California Civil Code Section 1717, each
party warrants that it was represented by counsel in the negotiation and
execution of this Agreement, including the attorneys fees provision herein.
6.6 COMPLETE AGREEMENT. This Agreement, including Exhibit A, constitutes
the entire agreement between Executive and the Company and it is the complete,
final, and exclusive
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embodiment of their agreement with regard to this subject matter. It is entered
into without reliance on any promise or representation other than those
expressly contained herein.
6.7 AMENDMENT OR TERMINATION OF AGREEMENT. This Agreement may be changed
or terminated only upon the mutual written consent of the Company and Executive.
The written consent of the Company to a change or termination of this Agreement
must be signed by an executive officer of the Company after such change or
termination has been approved by the Company's Board of Directors.
6.8 COUNTERPARTS. This Agreement may be executed in separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
Agreement.
6.9 HEADINGS. The headings of the Articles and Sections hereof are
inserted for convenience only and shall not be deemed to constitute a part
hereof nor to affect the meaning thereof.
6.10 SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors, assigns, heirs, executors and administrators,
except that Executive may not assign any duties hereunder and may not assign any
rights hereunder without the written consent of the Company, which consent shall
not be withheld unreasonably.
6.11 ATTORNEY FEES. If Executive brings any action to enforce his rights
hereunder, Executive shall be entitled to recover reasonable attorneys' fees and
costs incurred in connection with such action, regardless of the outcome of such
action.
6.12 CHOICE OF LAW. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the law of the State of
California, without regard to such state's conflict of laws rules.
6.13 NON-PUBLICATION. The parties mutually agree not to disclose
publicly the terms of this Agreement except to the extent that disclosure is
mandated by applicable law or to respective advisors (e.g., attorneys,
accountants).
6.14 CONSTRUCTION OF AGREEMENT. In the event of a conflict between the
text of the Agreement and any summary, description or other information
regarding the Agreement, the text of the Agreement shall control.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year written above.
CONTINUUS SOFTWARE CORPORATION EXECUTIVE
By:____________________________ ____________________________
Name:__________________________
Title:_________________________
Exhibit A: Employee Agreement and Release
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EXHIBIT A
EMPLOYEE AGREEMENT AND RELEASE
I understand and agree completely to the terms set forth in the
foregoing agreement.
I hereby confirm my obligations under the Company's proprietary
information and inventions agreement.
I acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: "A GENERAL RELEASE DOES NOT EXTEND
TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR." I hereby expressly waive and
relinquish all rights and benefits under that section and any law of any
jurisdiction of similar effect with respect to my release of any claims I may
have against the Company.
Except as otherwise set forth in this Agreement, I hereby release,
acquit and forever discharge the Company, its parents and subsidiaries, and
their officers, directors, agents, servants, employees, shareholders,
successors, assigns and affiliates, of and from any and all claims, liabilities,
demands, causes of action, costs, expenses, attorneys fees, damages, indemnities
and obligations of every kind and nature, in law, equity, or otherwise, known
and unknown, suspected and unsuspected, disclosed and undisclosed (other than
any claim for indemnification I may have as a result of any third party action
against me based on my employment with the Company), arising out of or in any
way related to agreements, events, acts or conduct at any time prior to and
including the date seven (7) days preceding the Effective Date of this
Agreement, including but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with my employment with the
Company or the termination of that employment, including but not limited to,
claims of intentional and negligent infliction of emotional distress, any and
all tort claims for personal injury, claims or demands related to salary,
bonuses, commissions, stock, stock options, or any other ownership interests in
the Company, vacation pay, fringe benefits, expense reimbursements, severance
pay, or any other form of compensation; claims pursuant to any federal, state or
local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act
of 1967, as amended ("ADEA"); the federal Americans with Disabilities Act of
1990; the California Fair Employment and Housing Act, as amended; tort law;
contract law; wrongful discharge; discrimination; fraud; defamation; emotional
distress; and breach of the implied covenant of good faith and fair dealing;
provided, however, that nothing in this paragraph shall be construed in any way
to release the Company from its obligation to indemnify me pursuant to the
Company's Indemnification Agreement.
I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under ADEA. I also acknowledge that the consideration
given for the waiver and release in the preceding paragraph hereof is in
addition to anything of value to which I was already entitled. I further
acknowledge that I have been advised by this writing, as required by the ADEA,
that: (A) my waiver and release do not apply to any rights or claims that may
arise after the Effective Date of this Agreement; (B) I have the right to
consult with an attorney prior to executing this Agreement; (C) I have
twenty-one (21) days to consider this Agreement (although I may choose to
voluntarily execute this Agreement earlier); (D) I have seven (7) days following
the execution of this Agreement by the parties to revoke the Agreement; and (E)
this Agreement shall not be effective until the date upon which the revocation
period has expired, which shall be the eighth day after this Agreement is
executed by me, provided that the Company has also executed this Agreement by
that date (the "Effective Date").
CONTINUUS SOFTWARE CORPORATION EXECUTIVE
By: ___________________________ ___________________________
Title: ________________________ Date: _____________________
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