EXHIBIT 10.15
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (this "Agreement"), dated as of
______________, 1999, is between PRIMUS KNOWLEDGE SOLUTIONS, INC., a Washington
corporation (the "Company"), and _________________ (the "Employee").
RECITAL
The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to ensure that the
Company will have the continued dedication of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Section
1.1 hereof) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Employee arising from the personal uncertainties
and risks created by a pending or threatened Change of Control, to encourage the
Employee's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Employee with reasonable compensation and benefit arrangements upon a Change of
Control.
AGREEMENT
In order to accomplish these objectives, the Board has caused the Company
to enter into this Agreement.
1. DEFINITIONS
1.1 Change of Control
"Change of Control" means any of the following events:
(a) Consummation of any merger, consolidation or share exchange of the
Company or pursuant to which shares of the Company's stock are converted into
cash, securities or other property, if following such merger, consolidation or
share exchange the holders of the Company's outstanding voting securities
immediately prior to such merger, consolidation or share exchange own less than
a majority of the outstanding voting securities of the surviving corporation;
(b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all of
the
Company's assets other than a transfer of the Company's assets to a majority-
owned subsidiary of the Company; or
(c) Acquisition by a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) of the Exchange Act of 1934, as amended (the "Exchange Act") of
a majority or more of the Company's outstanding voting securities (whether
directly or indirectly, beneficially or of record). Ownership of voting
securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) under the Exchange Act.
1.2 Change of Control Date
"Change of Control Date" shall mean the first date on which a Change of
Control occurs.
1.3 Employment Period
"Employment Period" shall mean the one-year period commencing on the Change
of Control Date and ending on the first anniversary of such date.
2. TERM
The term of this Agreement ("Term") shall be for one year following the
Change of Control Date, unless extended by the parties hereto.
3. EFFECT ON OTHER AGREEMENTS
The provisions of this Agreement shall be deemed to amend the terms of
those certain Option Agreements (the "Option Agreements") between the Company
and the Employee, dated ______________, relating to the Employee's incentive
stock option to purchase ___________ shares of the Company's common stock (as
adjusted to reflect a one-for-three stock split effected in May 1999) and the
Employee's nonqualified stock option to purchase ________ shares (as adjusted to
reflect a one-for-three stock split effected in May 1999) of the Company's
common stock, respectively (the "Employee Options").
4. ACCELERATION OF VESTING
Immediately prior to closing of a Change of Control, fifty percent (50%) of
the unvested portion of all options to purchase the Company's stock held by the
Employee at the time of the Change of Control shall automatically become fully
vested and exercisable whether or not the vesting requirements set forth in the
applicable Option Agreements have been satisfied; provided, that the vesting of
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options that are subject to performance criteria which, if met, would accelerate
the option vesting to time-based vesting only shall not accelerate pursuant to
this Section 4 unless such performance criteria have already been met and such
options have become subject to time-based vesting only.
5. EMPLOYMENT
5.1 Employment Period
During the Employment Period, the Company hereby agrees to continue the
Employee in its employ or in the employ of its affiliated companies, and the
Employee hereby agrees to remain in the employ of the Company or its affiliated
companies, in accordance with the terms and provisions of this Agreement;
provided, however, that either the Company or the Employee may terminate the
employment relationship subject to the terms of this Agreement.
5.2 Position and Duties
During the Employment Period, the Employee's title, position, authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 90-day period immediately preceding the Change of Control Date.
5.3 Location
During the Employment Period, the Employee's services shall be performed at
the Company's headquarters on the Change of Control Date or any office which is
subsequently designated as the headquarters of the Company and is located in
King County, Washington.
5.4 Termination Prior to Change of Control
If prior to the Change of Control Date, the Employee's employment with the
Company or its affiliated companies terminates for any reason, then the Employee
shall have no further rights under this Agreement; provided, however, that the
Company may not avoid liability for any termination payments which would have
been required during the Employment Period pursuant to Section 9 hereof by
terminating the Employee prior to the Employment Period where such termination
is carried out in anticipation of a Change of Control and the principal
motivating purpose is to avoid liability for such termination payments.
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6. ATTENTION AND EFFORT
During the Employment Period, and excluding any periods of vacation and
sick leave to which the Employee is entitled, the Employee will devote all his
productive time, ability, attention and effort to the business and affairs of
the Company and the discharge of the responsibilities assigned to him hereunder,
and he will use his reasonable best efforts to perform faithfully and
efficiently such responsibilities. It shall not be a violation of this
Agreement for the Employee to (a) serve on corporate, civic or charitable boards
or committees approved in advance by the Company's Board of Directors, (b)
deliver lectures, fulfill speaking engagements or teach at educational
institutions, (c) manage personal investments, so long as such activities do not
significantly interfere with the performance of the Employee's responsibilities
in accordance with this Agreement and (d) other activities approved in advance
by the Company. It is expressly understood and agreed that to the extent any
such activities have been conducted by the Employee prior to the Employment
Period, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) during the Employment Period shall not
thereafter be deemed to interfere with the performance of the Employee's
responsibilities to the Company.
7. COMPENSATION AND BENEFITS
As long as the Employee remains employed by the Company during the
Employment Period, the Company agrees to pay or cause to be paid to the
Employee, and the Employee agrees to accept in exchange for the services
rendered hereunder by him, the following compensation:
7.1 Salary
The Employee shall receive an annual base salary (the "Annual Base Salary")
at least equal to the annual salary established by the Board or a committee of
the Board (the "Compensation Committee") for the fiscal year in which the Change
of Control Date occurs. The Annual Base Salary shall be paid in substantially
equal installments and at the same intervals as the salaries of other employees
of the Company are paid. The Board or the Compensation Committee shall review
the Annual Base Salary at least annually and shall determine in good faith and
consistent with any generally applicable Company policy any increases for future
years.
7.2 Bonus
In addition to Annual Base Salary, the Employee shall be awarded an annual
bonus (the "Annual Bonus") in cash at least equal to the average annualized (for
any fiscal year consisting of less than 12 full months) bonus paid or payable,
including by
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reason of any deferral, to the Employee by the Company and its affiliated
companies in respect of the three fiscal years immediately preceding the fiscal
year in which the Change of Control Date occurs. Each such Annual Bonus shall be
paid no later than 90 days after the end of the fiscal year for which the Annual
Bonus is awarded, unless the Employee shall elect to defer the receipt of such
Annual Bonus.
7.3 Incentive, Retirement and Welfare Benefit Plans; Vacation
During the Employment Period, the Employee shall be entitled to
participate, subject to and in accordance with applicable eligibility
requirements, in such fringe benefit programs as shall be generally made
available to other employees of the Company and its affiliated companies from
time to time during the Employment Period by action of the Board (or any person
or committee appointed by the Board to determine fringe benefit programs and
other emoluments), including, without limitation, paid vacations; any stock
purchase, savings or retirement plan, practice, policy or program; and all
welfare benefit plans, practices, policies or programs (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
or programs).
7.4 Expenses
During the Employment Period, the Employee shall be entitled to receive
prompt reimbursement for all reasonable employment expenses incurred by him in
accordance with the policies, practices and procedures of the Company and its
affiliated companies in effect for the employees of the Company and its
affiliated companies during the Employment Period.
8. TERMINATION
During the Employment Period, employment of the Employee may be terminated
as follows:
8.1 By the Company or the Employee
At any time during the Employment Period, the Company may terminate the
employment of the Employee with or without Cause (as defined below), and the
Employee may terminate his employment for Good Reason (as defined below) or for
any reason, upon giving Notice of Termination (as defined below).
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8.2 Automatic Termination
This Agreement and the Employee's employment during the Employment Period
shall terminate automatically upon the death or Total Disability of the
Employee. The term "Total Disability" as used herein shall mean the Employee's
inability (with such accommodation as may be required by law and which places no
undue burden on the Company), as determined by an independent physician selected
by the Company and reasonably acceptable to the Employee, to perform the duties
set forth in Section 5.2 hereof for a period or periods aggregating 120 calendar
days in any 12-month period as a result of physical or mental illness, loss of
legal capacity or any other cause beyond the Employee's control, unless the
Employee is granted a leave of absence by the Board. The Employee and the
Company hereby acknowledge that the duties specified in Section 5.2 hereof are
essential to the Employee's position and that Employee's ability to perform
those duties is the essence of this Agreement.
8.3 Notice of Termination
Any termination by the Company or by the Employee during the Employment
Period shall be communicated by Notice of Termination to the other party given
in accordance with Section 12 hereof. The term "Notice of Termination" shall
mean a written notice which (a) indicates the specific termination provision in
this Agreement relied upon and (b) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated. The
failure by the Employee or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Employee or the Company hereunder or preclude
the Employee or the Company from asserting such fact or circumstance in
enforcing the Employee's or the Company's rights hereunder.
8.4 Date of Termination
During the Employment Period, "Date of Termination" means (a) if the
Employee's employment is terminated by reason of death, at the end of the
calendar month in which the Employee's death occurs, (b) if the Employee's
employment is terminated by reason of Total Disability, immediately upon a
determination by the Company of the Employee's Total Disability, and (c) in all
other cases, five days after the effective date of notice pursuant to Section 12
hereof. The Employee's employment and performance of services will continue
during such five-day period; provided, however, that the Company may, upon
notice to the Employee and without
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reducing the Employee's compensation during such period, excuse the Employee
from any or all of his duties during such period.
9. TERMINATION PAYMENTS
In the event of termination of the Employee's employment during the
Employment Period, all compensation and benefits set forth in this Agreement
shall terminate, except as specifically provided in this Section 9.
9.1 Termination by the Company Other Than for Cause or by the Employee for
Good Reason
If during the Employment Period the Company terminates the Employee's
employment other than for Cause or the Employee terminates his employment for
Good Reason, the Employee shall be entitled to the following, less any amounts
required by applicable law to be withheld by the Company:
(a) receive payment of the following accrued obligations (the "Accrued
Obligations"):
(i) the Employee's Annual Base Salary, bonus and any accrued
commissions through the Date of Termination to the extent not theretofore
paid; and
(ii) any compensation previously deferred by the Employee
(together with accrued interest or earnings thereon, if any) and any
accrued vacation pay which would be payable under the Company's standard
policy, in each case to the extent not theretofore paid;
(b) an amount as severance pay equal to one-half of Employee's Annual
Base Salary for the fiscal year in which the Date of Termination occurs;
provided, that such payment shall be in full and final satisfaction of any claim
of the Employee against the Company arising out of the officer's employment by
the Company or the termination of such employment;
(c) immediate vesting and exercisability of all options to purchase
securities of the Company or its successors held by the Employee, including but
not limited to the Employee Options; and
(d) to the extent that the Employee regularly receives commission
payments as part of his or her compensation, to receive commissions (at rates
determined in good faith and consistent with past practices) with respect to any
sales completed by the Company during the six months immediately following the
Date of
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Termination to accounts as to which the Employee had responsibility during the
twelve months prior to the Date of Termination.
9.2 Termination for Cause or Other Than for Good Reason
If during the Employment Period the Employee's employment shall be
terminated by the Company for Cause or by the Employee for other than Good
Reason, this Agreement shall terminate without further obligation on the part of
the Company to the Employee, other than the Company's obligation to pay the
Employee the Accrued Obligations to the extent theretofore unpaid.
9.3 Expiration of Term
In the case of a termination of the Employee's employment as a result of
the expiration of the Term of this Agreement, this Agreement shall terminate
without further obligation on the part of the Company to the Employee, other
than the Company's obligation to pay the Employee the Accrued Obligations.
9.4 Termination Because of Death or Total Disability
If during the Employment Period the Employee's employment is terminated by
reason of the Employee's death or Total Disability, this Agreement shall
terminate automatically without further obligation on the part of the Company to
the Employee or his legal representatives under this Agreement, other than the
Company's obligation to pay the Employee the Accrued Obligations (which shall be
paid to the Employee's estate or beneficiary, as applicable in the case of the
Employee's death).
9.5 Payment Schedule
All payments of the Accrued Obligations and the Severance Obligation, or
any portion thereof payable pursuant to this Section 9, shall be made to the
Employee within thirty calendar days of the Date of Termination.
9.6 Cause
For purposes of this Agreement, "Cause" means cause given by the Employee
to the Company and shall be limited to the occurrence of one or more of the
following events:
(a) A clear refusal to carry out any material lawful duties of the
Employee or any directions of the Board, all reasonably consistent with the
duties described in Section 5.2 hereof, provided the Employee has been given
reasonable notice and opportunity to correct any such failure;
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(b) Violation by the Employee of a state or federal criminal law
involving the commission of a crime against the Company or any of its
subsidiaries; or
(c) Deception, fraud, misrepresentation or dishonesty by the Employee;
any incident materially compromising the Employee's reputation or ability to
represent the Company with investors, customers or the public.
9.7 Good Reason
For purposes of this Agreement, "Good Reason" means
(a) The assignment to the Employee of any duties materially
inconsistent with the Employee's title, position, authority, duties or
responsibilities as contemplated by Section 5.2 hereof or any other action by
the Company which results in a material diminution in such title, position,
authority, duties or responsibilities;
(b) Any failure by the Company to comply with any of the provisions of
Section 7 hereof;
(c) The Company's requiring the Employee to be based at any office or
location other than that described in Section 5.3 hereof;
(d) Any failure by the Company to comply with and satisfy Section 13
hereof, provided that the Company's successor has received at least ten days'
prior written notice from the Company or the Employee of the requirements of
Section 13 hereof; or
(e) Any other material violation of any provision of this Agreement by
the Company.
9.8 Excess Parachute Limitation
Notwithstanding any other provisions of this Agreement, if either the
Company or the Employee receives confirmation from the Company's independent tax
counsel or its certified public accounting firm, or such other accounting firm
retained as independent certified public accountants for the Company (the "Tax
Advisor"), that any severance benefit granted by the Company to the Employee
under this Agreement or otherwise would be considered to be an "Excess Parachute
Payment" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended, or any successor statute then in effect (the "Code"), then the
following rules shall apply:
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(i) The Company shall compute the net value to the Employee of all
such severance benefits after reduction for the excise taxes imposed by Section
4999 of the Code and for any income taxes that would be imposed on Employee if
such severance benefits constituted Employee's sole taxable income.
(ii) The Company shall next compute the maximum amount of severance
benefits that can be provided without any benefits being characterized as Excess
Parachute Payments and reduce the result by the amount of any income taxes that
would be imposed on Employee if such reduced severance benefits constituted
Employee's sole taxable income.
If the result derived in subparagraph (i) is greater than the result
derived in subparagraph (ii), then the Company shall provide Employee the full
amount of severance benefits without reduction. If the result derived from
subparagraph (i) is not greater than the result derived in subparagraph (ii),
then the Company shall provide the Employee the maximum amount of severance
benefits that can be provided without any benefits being characterized as Excess
Parachute Payments.
10. REPRESENTATIONS, WARRANTIES AND OTHER CONDITIONS
In order to induce the Company to enter into this Agreement, the Employee
represents and warrants to the Company that neither the execution nor the
performance of this Agreement by the Employee will violate or conflict in any
way with any other agreement by which the Employee may be bound.
11. NOTICE AND CURE OF BREACH
Whenever a breach of this Agreement by either party is relied upon as
justification for any action taken by the other party pursuant to any provision
of this Agreement, other than pursuant to the definition of Cause set forth in
Section 9.6 hereof, before such action is taken, the party asserting the breach
of this Agreement shall give the other party at least ten days' prior written
notice of the existence and the nature of such breach before taking further
action hereunder and shall give the party purportedly in breach of this
Agreement the opportunity to correct such breach during the ten-day period.
12. FORM OF NOTICE
All notices given hereunder shall be given in writing, shall specifically
refer to this Agreement and shall be personally delivered or sent by telecopy or
other electronic facsimile transmission or by reputable overnight courier, at
the address set
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forth below or at such other address as may hereafter be designated by notice
given in compliance with the terms hereof. Such notice shall be effective upon
receipt or upon refusal of the addressee to accept delivery.
If to Employee:
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If to Company: Primus Knowledge Solutions, Inc.
0000 Xxxxx Xxx., Xxxxx 0000
Xxxxxxx, XX 00000
Attn: General Counsel
Phone: (000) 000-0000
Facsimile: (000) 000-0000
Copy to: Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
13. ASSIGNMENT
This Agreement is personal to the Employee and shall not be assignable by
the Employee. The Company shall assign to and require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Company to assume expressly
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean Primus Knowledge
Solutions, Inc. and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise. All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and permitted assigns.
14. WAIVERS
No delay or failure by any party hereto in exercising, protecting or
enforcing any of its rights, titles, interests or remedies hereunder, and no
course of dealing or performance with respect thereto, shall constitute a waiver
thereof. The express
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waiver by a party hereto of any right, title, interest or remedy in a particular
instance or circumstance shall not constitute a waiver thereof in any other
instance or circumstance. All rights and remedies shall be cumulative and not
exclusive of any other rights or remedies.
15. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by the Company
and the Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Company and the Employee.
16. APPLICABLE LAW
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the state of Washington, without regard
to any rules governing conflicts of laws.
17. ARBITRATION
Any dispute arising under this Agreement shall be subject to arbitration.
The arbitration proceeding shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA Rules") then
in effect, conducted by one arbitrator either mutually agreed upon or selected
in accordance with the AAA Rules, except that the parties thereto shall have any
right to discovery as would be permitted by the Federal Rules of Civil Procedure
for a period of 90 days following the commencement of such arbitration and the
arbitrator thereof shall resolve any dispute which arises in connection with
such discovery. The arbitration shall be conducted in King County, Washington
under the jurisdiction of the Seattle office of the American Arbitration
Association. The arbitrator shall have authority only to interpret and apply
the provisions of this Agreement and shall have no authority to add to, subtract
from, or otherwise modify the terms of this Agreement. Any demand for
arbitration must be made within 60 days of the event(s) giving rise to the claim
that this Agreement has been breached. The arbitrator's decision shall be final
and binding, and each party agrees to be bound by the
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arbitrator's award subject, only to an appeal therefrom in accordance with the
laws of the state of Washington. Either party may obtain judgment upon the
arbitrator's award in the Superior Court of King County, Washington.
18. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, then, to the full extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision hereof, and (c) any court or
arbitrator having jurisdiction thereover shall have the power to reform such
provision to the extent necessary for such provision to be enforceable under
applicable law.
19. ENTIRE AGREEMENT
This Agreement on and as of the date hereof constitutes the entire
agreement between the Company and the Employee with respect to the subject
matter hereof and all prior or contemporaneous oral or written communications,
understandings or agreements between the Company and the Employee with respect
to such subject matter are hereby superseded and nullified in their entireties.
20. COUNTERPARTS
This Agreement may be executed in counterparts, each of which counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
21. HEADINGS
All headings used herein are for convenience only and shall not in any way
affect the construction of, or be taken into consideration in interpreting, this
Agreement.
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IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement effective on the date first set forth above.
EMPLOYEE
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PRIMUS KNOWLEDGE SOLUTIONS, INC.
By
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