Exhibit 10.15
CHANGE OF CONTROL AGREEMENT
---------------------------
CHANGE OF CONTROL AGREEMENT, dated as of September 7, 2000, by and between
SmarterKids.com. (the "Company") and __________ (the "Senior Executive"). This
Agreement supercedes any other agreement between the parties.
WHEREAS, the Company believes it to be to its advantage to employ the
Senior Executive to render services to the Company as hereinafter provided;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Senior Executive is willing to continue to render services to
the Company subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Senior
Executive agree as follows:
1. TERMINATION FOLLOWING A CHANGE OF CONTROL.
-----------------------------------------
(a) If, at any time after a Change in Control (as such term is defined in
Section 3(b)), but prior to the date three (3) years from the date of a Change
in Control, the Company terminates the Senior Executive's employment, the
Company shall:
(i) continue to pay to the Senior Executive, in accordance with the
Company's normal payroll practices and policies in effect from time to
time (including any required withholding), the Senior Executive's base
salary (at the monthly base salary rate in effect for such Senior
Executive immediately prior to the termination of his employment)
until the earlier of (i) twelve (12) months following the termination
of the Senior Executive's employment, or (ii) the date the Senior
Executive is employed by a subsequent employer or is engaged as a
consultant (note: in the event of consulting income of less than base
salary, the Company will compensate the difference) (the "Severance
Payments"); provided, however, that the Company shall not be obligated
to make any Severance Payments pursuant to this Section 1(a) during
any period in which the Senior Executive is in violation of the terms
of his/her Employee Noncompetition, Nondisclosure and Developments
Agreement with the Company;
(ii) the date of the Senior Executive's termination shall be the date of
the "qualifying event" under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). If the Senior Executive elects
to continue medical insurance coverage after termination in accordance
with the provisions of COBRA, the Company shall pay the Senior
Executive's monthly premium payments until the earlier of (i) the date
which is twelve (12) months following the termination of the Senior
Executive's employment; (ii) the date the Senior Executive obtains
other
A-2
employment, or (iii) the date the Senior Executive's COBRA
continuation coverage would terminate in accordance with the
provisions of COBRA. Thereafter, if the payment of monthly premiums
by the Company has ceased due to a reason in (i) or (ii) above, the
Senior Executive will be responsible for any and all payments for the
remaining period of elected continued health insurance coverage under
COBRA.
(iii) In addition to any other vesting provisions that the Senior
Executive may be entitled to in accordance with other agreements
with the Company, accelerate the vesting of all of the Senior
Executive's incentive and non-qualified stock options by twelve (12)
months from the date of the termination;
(b) For purposes of Section 1, "Good Reason" shall mean the occurrence of
one or more of the following events following a Change of Control: (i) the
assignment to the Senior Executive of any duties substantially inconsistent with
his position, authority, duties or responsibilities immediately prior to the
Change of Control or any other action by the Company which results in a
substantial limitation in such position, authority, duties or responsibilities;
(ii) a substantial reduction in the aggregate of the Senior Executive's base or
incentive compensation of the termination of the Senior Executive's rights or
any employee benefits immediately prior to the Change of Control, except to the
extent any such benefit is replaced with a substantially similar benefit, or a
reduction in scope of value thereof; or (iii) a relocation of the Senior
Executive's place of business which results in the one-way commuting distance
for the Senior Executive increasing by more than 50 miles from the location
thereof immediately prior to the Change of Control (provided, however, that
travel consistent with past practices for business purposes shall not be
considered "commuting" for purposes of this clause (iii)); or (iv) a failure by
the Company to obtain the agreement referenced in Section 3(f).
2. TERM. If a Change of Control has not occurred within three (3) years
----
from the date hereof, this Agreement shall terminate and be of no further force
and effect.
3. GENERAL.
-------
(a) Notwithstanding anything else to the contrary herein: (i) the
Company's obligation to provide any of the amounts and benefits set forth in
this Agreement shall be subject to, and conditioned upon, the Senior Executive's
execution of a full release of claims satisfactory to the Company releasing the
Company and its affiliates, subsidiaries, divisions, directors, employees and
agents from any claims arising from or related to the Senior Executive's
employment or severance from employment with the Company, including any claims
arising from this Agreement (the "Release"); (ii) the Company shall not be
obligated to provide any of the amounts and benefits set forth in this Agreement
until any applicable period within which the Senior Executive may revoke the
Release has expired; and (iii) any amounts and benefits set forth in this
Agreement shall be reduced by any and all other severance or other amounts or
benefits paid or payable to the Senior Executive as a result of the termination
of his employment.
A-3
(b) In the event the Senior Executive's employment with the Company is
terminated by the Company for any reason other than without Cause, or the Senior
Executive terminates his employment with the Company for any reason other than
Good Reason, the Senior Executive shall not be entitled to any severance
benefits or other considerations described herein.
(c) For purposes of this Agreement, "Change of Control" shall mean the
closing of: (i) a merger, consolidation, liquidation or reorganization of the
Company into or with another Company or other legal person, after which merger,
consolidation, liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not converted into or
exchanged for or does not represent more than 50% of the aggregate voting power
of the surviving or resulting entity; or (ii) the direct or indirect acquisition
by any person (as the term "person" is used in Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended) of more than 50% of the voting
capital stock of the Company, in a single or series of related transactions.
(d) For purposes of this Agreement, "Cause" shall mean: (i) the commission
of the Senior Executive of a felony, either in connection with the performance
of his obligations to the Company or which adversely affects the Senior
Executive's ability to perform such obligations; (ii) gross negligence,
dishonesty or breach of fiduciary duty; or (iii) the commission by the Senior
Executive of an act of fraud or embezzlement which results in loss, damage or
injury to the Company, whether directly or indirectly.
(e) Notwithstanding anything to the contrary in this Agreement, if the
Company determines in its sole discretion after consultation with its tax and
accounting advisors that the Senior Executive is a Disqualified Individual (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code")) and that any portion of any payment or distribution by the Company to
or for the benefit of the Senior Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment") would be an Excess Parachute Payment (as defined in
Section 280G of the Code) but for the application of this sentence, then the
amount of all such Payments otherwise payable to the Senior Executive pursuant
to this Agreement shall be reduced to the minimum extent necessary (but in no
event to less than zero) so that no portion of any Payment, as so reduced,
constitutes an Excess Parachute Payment. For purposes of this reduction, no
portion of any Payment shall be taken into account to the extent that such
Payment, in the opinion of the Company, after consultation with its tax and
accounting advisors, does not constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code.
(f) Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) of
the Company; provided, however, that the Company shall obtain the written
agreement of any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company to be bound by the
provisions of this Agreement as if such successor were the Company and for
purposes of this Agreement, any such successor of the Company shall be deemed to
be the "Company" for all purposes.
A-4
(g) Nothing in this Agreement shall create any obligation on the part of
the Company or any other person to continue the employment of the Senior
Executive or to employ the Senior Executive for any specific or definite term or
length of employment. If the Senior Executive elects to receive the severance
and benefits set forth in this Agreement by executing the Release, the Senior
Executive shall not be entitled to any other salary continuation, severance or
other termination benefits in the event of his cessation of employment with the
Company.
(h) Nothing herein shall affect the Senior Executive's obligations under
any key employee, non-competition, confidentiality, option or similar agreement
between the Company and the Senior Executive currently in effect or which may be
entered into in the future.
4. REPRESENTATIONS AND GOVERNING LAW
---------------------------------
(a) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
(b) This Agreement represents the complete and sole understanding between
the parties, supersedes any and all other agreements and understandings, whether
oral or written. This Agreement may not be modified, amended or rescinded except
upon the written consent of the Company and the Senior Executive. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the other provisions of this Agreement and this Agreement shall be
construed and reformed to the fullest extent possible.
(c) The Senior Executive may not assign any of his rights or obligations
under this Agreement; the rights and obligations of the Company under this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and assigns of the Company. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument.
(d) The Senior Executive represents that he has read the foregoing
Agreement, fully understands the terms and conditions of such Agreement, and is
voluntarily executing the same. In entering into this Agreement, the Senior
Executive does not rely on any representation, promise or inducement made by the
company, with the consideration described herein.
[Remainder of page intentionally left blank]
A-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
The Company:
-----------
SMARTERKIDS.COM
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
The Senior Executive:
--------------------
--------------------------------------------