EXHIBIT 10.27
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") is entered into as of December 6,
2002, by and between Timothy C. Choate ("Employee"), and Aptimus, Inc.
("Aptimus").
RECITALS
A. Employee is a valued member of Aptimus' senior management team whose
continued diligence and best efforts in the execution of Employee's duties
Aptimus wishes to incentivise and encourage.
B. Aptimus has determined that one measure to achieve this end is to
provide for Employee's financial security in the form of a severance payment and
other benefits in the event of the termination of Employee's employment under
certain conditions.
C. Aptimus and Employee desire to memorialize the terms and conditions of
such severance as set forth herein.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. Definitions. As used herein, the following terms shall have the
described meanings:
(a) "Award" means the grant of Aptimus, Inc. restricted stock or an
option to purchase Aptimus, Inc. common stock to Employee.
(b) "Award Agreement" means a written agreement between Aptimus and
Employee relating to an Award under the Aptimus, Inc. 2001 Stock Plan or
FreeShop International, Inc. 1997 Stock Option Plan, as the case may be.
(c) "Cause" means willful, reckless or negligent misconduct with
respect to, or that is harmful to, Aptimus or any of its officers, directors,
employees, clients, partners, insurers, or other third parties, including
without limitation, acts of dishonesty, fraud, unauthorized use or disclosure of
confidential information or trade secrets or other misconduct, in each case as
determined by Aptimus in its sole and absolute discretion. In addition, "Cause"
means the repeated failure to meet the directives of Employee's manager.
(d) "Change in Control" shall mean any of the following:
(i) a consolidation or merger of Aptimus pursuant to which:
(1) Aptimus is not the continuing or surviving corporation, (2) the shareholders
of the target entity acquire as a consequence of such consolidation or merger
securities of Aptimus representing more than 50% of the combined voting power of
Aptimus' then outstanding securities, or (3) shares of Aptimus' outstanding
capital stock are converted into cash, securities or other property,
in each instance other than a consolidation or merger of Aptimus in which
Aptimus' shareholders immediately prior to the consolidation or merger have the
same proportionate ownership of voting capital stock of the surviving
corporation immediately after the consolidation or merger; or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of Aptimus; or
(iii) the closing of a transaction in which any person has
either acquired outright or acquired the right to acquire, beneficial ownership
of securities of Aptimus representing more than 50% of the combined voting power
of Aptimus' then outstanding securities, and for this purpose the terms "person"
and "beneficial ownership" shall have the meanings provided in Section 13(d) of
the Securities Exchange Act of 1934, as amended, or related rules promulgated by
the Securities and Exchange Commission; or
(iv) a reduction in force by Aptimus that includes Employee's
position that is made a formal or informal prior condition of, or occurs within
one calendar year following, a transaction described in Sections 1(d)(i) - (iii)
hereof; or
(v) the voluntary or involuntary closure and winding up of
Aptimus' business and related affairs.
(e) "Good Reason" means the occurrence of any of the following
events or conditions without Employee's written consent:
(i) Aptimus is subject to a Change in Control and thereafter
there occurs a change in Employee's status, title, position, reporting structure
or responsibilities that from a reasonable and objective standard represents a
substantial reduction in the status, title, position, reporting structure or
responsibilities as in effect immediately prior thereto, and which is not
remedied promptly after receipt of written notice thereof from Employee; or
(ii) Aptimus is subject to a Change of Control and thereafter
requires Employee to be based at any place outside a 50-mile radius of his place
of employment prior to such Change in Control, except for reasonably required
travel on Aptimus' business that is not materially greater than such travel
requirements prior to the change in control.
(f) "Plan" means the Aptimus, Inc. 2001 Stock Plan or the FreeShop
International, Inc. 1997 Stock Option Plan, as the case may be.
2. Term and Termination. Aptimus employment of Employee is on an "at will"
basis and nothing in this Agreement shall be interpreted or construed as a
promise or contract of employment for a particular term or period. Aptimus may
terminate Employee's employment at any time with or without Cause and without
notice. Employee may terminate his employment at any time with or without Cause
upon ten- (10-) business days prior written notice to Aptimus; provided that no
such notice must be given, but in such event Employee's then accrued but unused
vacation pay, or if accrued vacation pay is insufficient, the severance payment
herein contemplated, shall be reduced by a number equal to the difference
between the required notice period and the actual number of business days notice
given by Employee, if any. For purposes of the foregoing notice deficit
provision, a business day shall equal an eight (8) hour accrual.
3. Severance.
(a) Termination by Aptimus. Upon termination of Employee's
employment by Aptimus in the event of a Change in Control, Aptimus shall
continue to pay Employee his base salary for the period described in Section
3(c) hereof; provided, however, that no such severance shall be due in the event
such termination is for Cause. For purposes of Sections 3(a) and (b), the base
salary rate used to calculate the severance payment herein contemplated shall be
the highest rate of such base salary received by Employee in the immediately
preceding 12 month period.
(b) Termination by Employee. Upon Employee's termination of his
employment for Good Reason within one (1) year from the subject Change in
Control event, Aptimus shall continue to pay Employee his base salary for the
period described in Section 3(c) hereof.
(c) Severance Period. Employee shall be entitled to receive his then
base salary as severance for a period of twelve (12) months ("Severance Period")
from the effective date of termination. Such severance shall be paid in
substantially equal increments at normal semi-monthly payroll intervals, or at
such intervals and amounts as the parties may otherwise agree. At his election,
Employee may continue to participate in Aptimus' medical and dental benefit
plans governed by the Comprehensive Omnibus Budget Reconciliation Act ("COBRA")
for the time period provided in COBRA. Aptimus shall pay the cost of such
coverage at the level in effect for Employee as of the effective date of
termination during the Severance Period. Employee shall pay the entire cost of
such coverage thereafter.
4. Change in Control Transactions. In the event of any Change in Control,
each option and each share of restricted stock awarded to Employee that is then
outstanding shall, immediately prior to the specified effective date for the
Change in Control, become 100% vested. Notwithstanding the foregoing, if and to
the extent any Award is, in connection with the Change in Control, either
continued in effect, assumed by the successor corporation (or parent thereof) or
replaced with a comparable award relating to shares of the capital stock of the
successor corporation (or its parent corporation), half (1/2) of the then
unvested option(s) and/or restricted stock subject to such Award shall
immediately prior to the effective date of the Change in Control, become vested,
and the balance of such unvested option(s) and/or restricted stock shall
continue to vest pursuant to the terms of the applicable Award Agreement. In the
event Employee's employment is terminated by Aptimus other than for Cause or by
Employee with Good Reason within one (1) year following such Change in Control,
and such Award was continued, assumed or replaced in the Change in Control and
was not otherwise accelerated at that time, all of the unvested option(s) and/or
shares subject to such Award shall vest immediately upon such termination and be
exercisable for a period of not less than the minimum period specified in the
Plan under such circumstances. To the extent Awards are not continued or assumed
by the successor corporation or an affiliate thereof, all unexercised Awards
shall terminate and cease to remain outstanding immediately following the
consummation of the Change in Control.
5. Miscellaneous.
(a) Waiver. No waiver of any provision of this Agreement shall be
valid unless in writing signed by the waiving party, nor shall any waiver or
failure to enforce any right
in one instance constitute or be deemed a continuing waiver of that right or of
any other right under this Agreement in any other instance.
(b) Assignment Prohibited. Employee may not assign any of his rights
nor delegate any of his duties hereunder. Aptimus may assign this Agreement and
delegate its duties hereunder in connection with any merger, consolidation or
sale of assets, or to any of its affiliates at any time owned by, or under
common ownership with, Aptimus. The rights and obligations of the parties shall
bind and inure to the benefit of their respective, successors, permitted
assigns, heirs and personal representatives.
(c) Choice of Law and Jurisdiction. Aptimus and Employee intend this
Agreement to be governed by and enforced to the greatest extent permitted by the
laws of the State of Washington without regard to its conflict of law principles
to the contrary. The parties agree to submit to the personal jurisdiction of the
state and federal courts sitting in King County, Washington, and agree that any
action, suit or proceeding in connection with this Agreement or concerning any
aspect of Employee's employment shall be brought in such courts to the exclusion
of all other forums.
(d) Savings Clause. If any provision of this Agreement is held to be
invalid or unenforceable to any extent, it shall nevertheless be enforced to the
fullest extent allowed by law in that and other contexts, and the validity and
force of the remainder of this Agreement shall not be affected.
(e) Notices. All notices required or permitted hereunder shall be
given in writing and delivered in person, transmitted by facsimile, delivered
via overnight courier or sent by registered or certified mail, postage prepaid
and return receipt requested, to the parties at their respective addresses and
facsimile numbers, or to such other address/number as a party may subsequently
specify in writing. Notice shall be deemed effective upon the earlier of actual
receipt, which if by facsimile shall be deemed conclusively determined by
electronic confirmation of delivery, the next day following deposit with a
national commercial delivery service if sent by overnight courier, or the third
business day after the date on which said notice was sent by any other method
described above.
(f) Complete Agreement. This Agreement comprises the entire
agreement between the parties. It may be changed only by further written
agreement, signed by both parties. It supersedes and merges within it all prior
agreements or understandings between the parties, whether written or oral. In
interpreting or construing this Agreement, the fact that one or the other of the
parties may have drafted this Agreement or any provision shall not be given any
weight or relevance.
(g) Attorney's Fees and Costs. The prevailing party in any claim,
suit or proceeding brought to interpret or enforce the terms of this Agreement
shall be entitled to an award of its attorneys fees and costs incurred in every
stage of such claim, suit or proceeding, including appeal.
Signed by the parties as of the date first written above.
APTIMUS, INC. EMPLOYEE
By:
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John B. Balousek, Director Timothy C. Choate
By:
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Robert W. Wrubel, Director