CHANGE OF CONTROL AGREEMENT
Exhibit 10.12
March ___, 2006
Dear ___:
The Board of Directors believes that it is in the best interests of Matrixx Initiatives,
Inc. (“Matrixx”), and its shareholders to take appropriate steps to allay any concerns you may have
about your future employment opportunities with Matrixx and its subsidiaries (Matrixx and its
subsidiaries are collectively referred to as the “Company”). As a result, the Board has decided to
offer to you the benefits described below.
Please bear in mind that these benefits are being offered only to a few, selected employees
and we ask you to refrain from discussing this program with others. Also, please note that the
benefits described below will only be effective if you sign the extra copy of this Change of
Control Agreement (the “Agreement”) and return it to me on or before ___, 2006.
1. TERM OF AGREEMENT.
This Agreement is effective immediately and will continue in effect as long as you are
actively employed by Matrixx, unless you and Matrixx agree in writing to its termination.
2. SEVERANCE PAYMENT.
If your employment with the Company is terminated without “Cause” (as defined in Section
6) at any time within one (1) year following a “Change of Control” (as defined in Section 4), you
will receive the “Severance Payment” described below. You will also receive the Severance Payment
if you terminate your employment for “Good Reason” (as defined in Section 5) at any time within one
(1) year following a Change of Control.
The Severance Payment equals one times the sum of (a) your Base Salary in effect for the
fiscal year immediately prior to the fiscal year in which termination of employment occurs, plus
(b) the average of the annual incentive bonuses paid to you for the two fiscal years immediately
preceding the fiscal year in which the Change of Control occurs (or, if less than two, the amount
of your single annual incentive bonus, if any).
The Severance Payment will be paid to you in one lump sum on the first day of the seventh
month following your termination of employment; provided that if you die before you receive the
above payment, the Company will distribute the benefits to your beneficiary as soon as
administratively feasible following the date of your death.
You are not entitled to receive the Severance Payment if your employment is terminated for
Cause, if you terminate your employment without Good Reason, or if
your employment is terminated by reason of your “Disability” (as defined in Section 7) or your death. In
addition, you are not entitled to receive the Severance Payment if your employment is terminated by
you or the Company for any or no reason before a Change of Control occurs or more than one (1) year
after a Change of Control has occurred.
You will receive the Severance Payment only if you execute a release agreement reasonably
requested by the Company.
The Severance Payment will be paid to you without regard to whether you look for or obtain
alternative employment following your termination of employment with the Company.
3. BENEFITS CONTINUATION.
If you timely elect to receive (and you are otherwise eligible to receive) continuation
of the Company’s group health plan coverage under the COBRA, the Company will pay the portion of
the employer’s share of the cost of your premium for 18 months of the COBRA coverage period (in
accordance with any premium cost-sharing arrangement in effect as of the date of termination).
The benefits you are entitled to receive under this Section 3 will be reduced or eliminated
if, and to the extent that, you receive comparable benefits from any other source (for example,
another employer); provided, however, you have no obligation to seek, solicit, or accept employment
from another employer to receive these benefits.
4. CHANGE OF CONTROL DEFINED .
For purposes of this Agreement, the term Change of Control means and will be deemed to
have occurred if:
(a) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provision thereto) becomes
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act or any successor
provision thereto) directly or indirectly of securities of the Company representing 15% or more of
the combined voting power of the Company’s then outstanding securities ordinarily having the right
to vote at an election of directors; provided, however, that, for this purpose, “person” excludes
the Company, any person acquiring such securities directly from the Company, any employee benefit
plan sponsored by the Company or from you or any stockholder beneficially owning more than 15% or
more of the combined voting power of the Company’s outstanding securities as of the date of this
Agreement; or
(b) any stockholder of the Company beneficially owning 15% or more of the combined voting
power of the Company’s outstanding securities as of the date of this Agreement shall becomes the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) directly or indirectly
of securities of the Company (other than through the acquisition of securities directly from the
Company or from you) representing 20% or more of the combined voting power of the Company’s then
outstanding securities ordinarily having the right to vote at an election of directors; or
2
(c) individuals who, as of the date of this Agreement, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least 80% of the Board, provided however, that any
person becoming a member of the Board subsequent to the date of this Agreement whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least 80% of
the members then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A under the Exchange Act or any successor provisions thereto) shall be,
for purposes of this Agreement, considered as though such person were a member of the Incumbent
Board; or
(d) approval by the stockholders of the Company and consummation of a reorganization, merger,
consolidation, or sale or other disposition of all or substantially all of the assets of the
Company, in each case, with or to a corporation or other person or entity of which persons who were
the stockholders of the Company immediately prior to such transaction do not, immediately
thereafter, own more than 80% of the combined voting power of the outstanding voting securities
entitled to vote generally in the election of directors of the reorganized, merged, consolidated or
purchasing corporation (or in the case of a non-corporate person or entity, functionally equivalent
voting power) and 80% of the members of the Board of which corporation (or functional equivalent in
the case of a non-corporate person or entity) were not members of the Incumbent Board at the time
of the execution of the initial agreement providing for such reorganization, merger, consolidation
or sale.
5. GOOD REASON DEFINED.
For purposes of this Agreement, the term “Good Reason” means the occurrence of any of the
following: (a) your compensation is reduced by the Company; (b) your function, duties and/or
responsibilities are significantly reduced so as to cause your position with the Company to become
of materially less dignity, responsibility and/or importance than those associated with your
functions, duties and/or responsibilities immediately before the Change of Control; or (c) if more
than once during the term of this Agreement, you are required by the Company permanently to
relocate your residence or the Company’s principal business office is relocated more than 60 miles
away from its then current location.
6. CAUSE DEFINED.
For purposes of this Agreement, the term “Cause” means the occurrence of any of the
following: (a) your gross and willful misconduct which results in material injury to the Company;
(b) your engaging in fraudulent conduct with respect to the Company’s or any of its affiliates’
business or in conduct of a criminal nature that may have an adverse impact on the Company’s or any
of its affiliates’ standing and reputation; (c) the material failure or refusal by you to perform
the duties required of you by the Board of Directors, which inappropriate failure or refusal is not
be cured within 30 days following receipt by you of written notice from the Board specifying the
factors or events constituting such failure or refusal; (d) your use of drugs and/or alcohol in
violation of then current Company policies; or (e) the material breach of your obligation to devote
substantially all of your business time, attention, skill, and
efforts to the faithful performance of your duties, which is not be cured within 30 days after written notice
to you from the Board.
3
At the Board’s sole discretion, you may be placed on a paid or unpaid administrative leave of
absence for a reasonable period of time if it is necessary to confirm that reasonable grounds exist
for a termination for Cause, for example, pending the outcome of any dispute resolution procedure
or any criminal charges. During this leave, the Board may bar your access to the Company’s offices
or facilities or may provide you with access subject to terms and conditions as the Board chooses
to impose. In any event, you or the Board may utilize the dispute resolution procedures contained
in Section 15 to challenge or confirm, as the case may be, a termination for Cause.
7. DISABILITY DEFINED.
For purposes of this Agreement, your suffering from a “Disability” means that you are
physically or mentally incapacitated so as to render you incapable of performing the essential
functions of your position with the Company for a period of more than ninety (90) consecutive days
or one hundred twenty (120) aggregate days in any twelve (12)-month period, with or without
reasonable accommodation by the Company. Your receipt of disability benefits under any long-term
disability plan of the Company or receipt of other long-term disability benefits shall be deemed
conclusive evidence of your having a Disability for purposes of this Agreement; provided, however,
that in the absence of your receipt of any such long-term disability benefits, the Company may, in
its reasonable discretion (but based upon appropriate medical evidence), determine that you have a
Disability.
8. TERMINATION NOTICE AND PROCEDURE.
Any termination by the Company or you of your employment shall be communicated by written
Notice of Termination to you if such Notice of Termination is delivered by the Company and to the
Company if such Notice of Termination is delivered by you, all in accordance with the following
procedures:
(a) The Notice of Termination shall indicate the specific termination provision of this
Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of your employment under the provision so indicated; and
(b) Any Notice of Termination by the Company shall be in writing signed by an executive
officer of Matrixx (or an executive officer of any parent or successor company or successor to the
business of Matrixx following a Change of Control) specifying in detail the basis for such
termination.
9. SUCCESSORS.
Matrixx will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of Matrixx or
any of its subsidiaries to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Matrixx or any subsidiary would be required to perform it
if no such succession had taken place.
4
10. BINDING AGREEMENT.
This Agreement shall inure to the benefit of and be enforceable by you and your personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If you die while any amount is payable to you hereunder had you continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to your devisee, legatee or other designee or, if there is no such designee, to your
estate.
11. NOTICE.
For purposes of this Agreement, notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed
by United States certified or registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth on the first page of this Agreement, provided that all
notices to Matrixx shall be directed to the attention of the Chief Executive Officer of Matrixx
with a copy to the Secretary of Matrixx, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of change in address
shall be effective only upon receipt.
12. MISCELLANEOUS.
No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by you and the Chief Executive Officer
of Matrixx. No waiver by either party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which are not
expressly set forth in this Agreement. The validity, interpretation, construction and performance
of this Agreement shall be governed by the laws of the State of Arizona without regard to its
conflicts of law principles. Any payments provided for hereunder shall be paid net of any
applicable withholding required under federal, state or local law. The obligations of Matrixx that
arise prior to the expiration of this Agreement shall survive the expiration of the term of this
Agreement.
13. VALIDITY.
The invalidity or unenforceability of any provision of this Agreement shall not affect
the validity or enforceability of any other provision of this Agreement, which shall remain in full
force and effect.
5
14. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which shall he deemed to
be an original but all of which together will constitute one and the same instrument.
15. ALTERNATIVE DISPUTE RESOLUTION.
If there is a dispute between the Company and you concerning the terms of this Agreement,
the dispute will be resolved by binding arbitration in accordance with the National Rules for the
Resolution of Labor Disputes (“Rules”) administered by the American Arbitration Association
(“AAA”). This arbitration will be held in the AAA office located nearest the Company’s
headquarters. The provisions of the Rules are incorporated as a part of this Agreement; provided,
however, that (i) the Company or you must initiate arbitration within one year from the date any
claim accrues; and (ii) either party may seek injunctive relief in court to avoid irreparable
injury during the pendency or arbitration proceedings. IT IS EXPRESSELY UNDERSTOOD THAT BY SIGNING
THIS AGREEMENT, WHICH INCORPORATES BINDING ARBITRATION, THE COMPANY AND YOU AGREE, EXCEPT AS
OTHERWISE PROVIDED ABOVE, TO WAIVE COURT OR JURY TRIAL TO THE FULLEST EXTENT PERMITTED BY LAW AND
TO WAIVE PUNITIVE, STATUTORY, CONSEQUENTIAL, AND ANY DAMAGES, OTHER THAN COMPENSATORY DAMAGES.
16. ENTIRE AGREEMENT.
This Agreement set forth the entire agreement between you and the Company concerning the
subject matter discussed in this Agreement and supersedes all prior agreements, promises,
covenants, arrangements, communications, representations, or warranties, whether written or oral,
by any officer, employee or representative of the Company. Any prior agreements or understandings
with respect to the subject matter set forth in this Agreement are hereby terminated and canceled.
17. PARTIES.
This Agreement is an agreement between you and Matrixx. In certain cases, though,
obligations imposed upon Matrixx may be satisfied by a subsidiary of Matrixx. Any payment made or
action taken by a subsidiary of Matrixx shall be considered to be a payment made or action taken by
Matrixx for purposes of determining whether Matrixx has satisfied its obligations under this
Agreement.
18. SECTION 409A OF THE CODE.
If any payments under this Agreement are subject to the provisions of Section 409A of the
Code, both you and the Company agree that this Agreement will comply fully with and meet all the
requirements of Section 409A of the Code.
6
If you would like to participate in this special benefits program, please sign and return the
extra copy of this Agreement.
| Sincerely, MATRIXX INITIATIVES, INC. |
||||
| By: | ||||
| Name: | ||||
| Its: | ||||
Enclosure
ACCEPTANCE
I hereby accept the offer to participate in this special benefits program and I agree to be
bound by all of the provisions noted above.
Dated: |
||||
| Signature | ||||
| Name |
7
