Change of Control Agreement

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Change of Control Agreement Powered By Docstoc
					A change of control agreement is an agreement between an employee and an employer
safeguarding the remunerative rights of the employee in exchange for continued
employment. This agreement is a group of mutual covenants designed to protect an
employee in the event that the company undergoes a change of control so that the
employee will be encouraged to remain in employment with the employer. If the
employment is terminated under certain conditions, such as without cause or through
involuntary termination, then the employee is entitled to receive certain benefits, such as
a bonus. This document should be used by an employee or by an employer seeking to
provide certain guarantees to an employee.
                  CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement (the “Agreement”) is hereby made and entered into on this
________________ day of ______________, _____ [Comment: insert date] (the “Effective
Date”)   by    and     between   ____________________________        (“Employer”)     and
____________________ (“Employee”).

WHEREAS,      Employee    is    currently   serving     in     the     capacity               of
________________________________ [Comment: insert the name of the position]; and

WHEREAS, Employer desires to provide certain protection to Employee in the event of a
change in control or potential change in control of Employer, in order to encourage Employee to
remain in the employment of Employer, notwithstanding any risks and uncertainties created by a
potential change in control of Employer, as set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants herein and of the continuing
employment of Employee by Employer, the parties agree as follows:

1.     Definition of Terms

The following terms referred to in this Agreement shall have the following meanings:

       a.     “Bonus” shall mean the following: (i) a lump sum payment equal to ___ (__)
              months of Employee’s annual base salary as in effect on the Effective Date, if
              prior to ___ (__) months from date of Change in Control (“Payment Date”) and
              Employer or successor corporation has not offered Employee employment with
              Employer or successor corporation or (ii) a lump sum payment equal to ___ (__)
              months of Employee’s annual base salary as in effect on the Effective Date, if
              prior to the Payment Date, Employer or successor corporation has offered
              Employee employment with Employer or successor corporation;

       b.     “Cause” shall mean: (i) any act of personal dishonesty taken by Employee in
              connection with his/her responsibilities as an employee and intended to result in
              substantial personal enrichment of Employee; (ii) commission of a felony or other
              offense that involves moral turpitude or is otherwise injurious to Employer or its
              reputation; (iii) a willful act by Employee that constitutes gross misconduct and
              that is injurious to Employer or its reputation; (iv) a material breach of this
              Agreement by Employee; or (v) continued violation by Employee of Employee’s
              obligations and duties as an employee of Employer that are demonstrably willful
              and deliberate on Employee’s part after written notification thereof by Employer
              or its successor, which notice shall specify the alleged instances of neglect of
              duty, and shall provide Employee with ____ (__) days in which to remedy such
              neglect, if it is subject to being remedied.

       c.     “Involuntary Termination” shall be deemed to occur if: (i) there is a significant
              reduction in Employee’s overall scope of duties, authorities, and responsibilities,
              provided that a change in job title shall not constitute a significant reduction in
              Employee’s duties; (ii) Employee is required to relocate its place of employment,
              other than a relocation within ____ (__) miles of Employee’s current business
              location; (iii) there is a reduction of more than ____ percent (%__) of Employee’s
              base salary; (iv) any material breach by Employer of any material provision of
              this Agreement that continues uncured for ___ (__) days following notice thereof,
              provided, however, that none of the foregoing shall constitute “involuntarily
              termination” to the extent Employee has agreed thereto in writing; or (v)
              termination of Employee’s employment with Employer or the successor
              corporation by Employer or the successor corporation other than for Cause.

       d.     “Change in Control” shall mean any merger, consolidation, sale of assets, or other
              similar transaction or series of transactions involving Employer, other than any
              such transaction or transactions following which Employer or its stockholders
              continue to own a majority of the combined voting power of the outstanding
              securities of the corporation or other entity surviving or succeeding to the
              business of Employer.

2.     Benefits upon a Change in Control

If: (a) during the term of this Agreement and while Employee remains an employee of Employer,
Employer shall be subject to a Change in Control and (b) within _______ (__) year(s) following
such Change in Control Employer terminates the employment of Employee involuntarily and
without Cause or a Involuntary Termination otherwise occurs, then in such case, Employee shall
be entitled to receive the Bonus. Employer or its successor shall pay such Bonus to Employee
not later than _________ (__) business days after the Payment Date.

3.     Exclusivity

The provisions of this Agreement are intended to be and are exclusive and in lieu of any other
rights or remedies to which Employee or Employer may otherwise be entitled, either at law, tort,
contract, in equity, under Employer policies in effect now or hereafter, or under this Agreement,
in the event that: (a) during the term of this Agreement and while Employee remains an
employee of Employer, Employer shall be subject to a Change in Control and (b) within
_________ (__) year(s) following such Change in Control, Employer terminates the employment
of Employee involuntarily and without Cause or an Involuntary Termination occurs. In such
circumstances, Employee shall be entitled to no benefits, compensation, or other payments or
rights upon termination of employment other than those benefits expressly set forth in Section 2,
above.

4.     No Bonus

No Bonus shall be payable hereunder to Employee if Employee’s employment is terminated for
Cause prior to the Payment Date.

5.     At-Will Employment


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This Agreement does not guarantee or imply any right to continued employment for any time
period whatsoever. Employer and Employee acknowledge that Employee’s employment is and
shall continue to be at-will, as that term is defined by applicable law. If Employee’s employment
terminates for any reason, all payments of compensation and benefits shall cease and thereafter,
Employee shall not be entitled to any payments, benefits, damages, awards, or compensation
except as outlined in this Agreement, and except as may otherwise be available in accordance
with Employer’s established employee plans and practices or other agreements Employee has
with Employer at the time of termination.

6.     Duration

The terms of this Agreement shall terminate upon the date that all obligations of the parties
hereunder have been satisfied; provided, however, that this Agreement may be extended for an
additional period or periods of time by resolution adopted by the Board of the Employer at any
time during the period that the Agreement is in effect.

7.   General Provisions

       a.     Severability

              If any provision of this Agreement shall be held invalid in a court of law, the
              remaining provisions shall be construed as if the invalid provision were not
              included in this Agreement.

       b.     Waiver

              No failure or delay on the part of either party in exercising any right, power, or
              privilege under this Agreement will operate as a waiver thereof, and no single or
              partial exercise of any such right, power, or privilege or of any other right, power,
              or privilege operate as a waiver of any subsequent exercise thereof.

       c.     Notices

              Any notice, consent, or other communication to be given under or in connection
              with this Agreement shall be in writing and shall be deemed duly given and
              received when delivered personally, when transmitted by facsimile if receipt is
              acknowledged by the addressee, one day after being deposited for next-day
              delivery with a nationally recognized overnight delivery service or ___ (__) days
              after being mailed by first class mail, charges or postage prepaid, properly
              addressed, if to the Employer, at _______________________________ and, if to
              Employee, at his or her address or facsimile number appearing on Employee’s
              records with Employer. Either Employer or Employee may change its or his or
              her address for this purpose from time to time by notice to the other.

       d.     Successors and Assigns



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              This Agreement shall inure to the benefit of and bind Employer, Employee, and
              their respective successors, assigns, heirs, and personal representatives.

       e.     Entire Agreement

              Employee acknowledges and reaffirms his/her obligations contained in this
              Agreement (by which Employee hereby agrees to be bound in consideration for
              the mutual agreements herein) and any Employee offer letter or employment
              agreement, if any, previously executed by Employee, including, without
              limitation, obligations regarding confidential information and non-competition. If
              there is any conflict between the terms of this Agreement and any offer letter or
              employment agreement, the terms of the more restrictive provisions shall control.
              This Agreement and any offer letter and/or employment agreement collectively
              contain the entire understanding of the parties with respect to the subject matter
              hereof and supersede any prior understandings or agreements between the parties
              with respect to such subject matter.

       f.     Survival

              All agreements, representations, warranties, and acknowledgments herein shall
              survive any termination of Employee’s employment with Employer for any
              reason.

       g.     Governing Law; Arbitration

              This Agreement shall be construed in accordance with and be governed by the
              laws of the State of _________ as they apply to contracts entered into and wholly
              to be performed within such state by residents of such state. Any dispute or
              controversy arising under or in connection with this Agreement shall be settled
              exclusively by arbitration within the State of _________, in accordance with the
              rules of the American Arbitration Association then in effect. Judgment may be
              entered on the arbitrator’s award in any court having jurisdiction. No party shall
              be entitled to seek or be awarded punitive damages. All attorneys’ fees and costs
              shall be allocated or apportioned by the parties, and, in the absence of any
              agreement or allocation or apportionment, shall be awarded to the prevailing
              party. Any contest as to the validity of this arbitration clause shall be decided by
              the arbitrator.

       h.     Employment Taxes

              All payments made pursuant to this Agreement will be subject to withholding of
              applicable taxes.

       i.     Counterparts




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              This Agreement may be executed in counterparts, each of which shall be deemed
              an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of
Employer by its duly authorized officer, as of the day and year first above written.

EMPLOYER:

By:           ________________________
Name:         ________________________
Print Name:   ________________________
Title:        ________________________


EMPLOYEE:

By:           ________________________
Name:         ________________________
Print Name:   ________________________




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 waiver of any subsequent exercise thereof.

8. NO LICENSE. Nothing herein shall be construed as a grant by the Employer of any license, directly or by implication, estoppel or otherwise, in any Confidential Information.

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9. ATTORNEYS' FEES. In the event either Party initiates action to enforce its rights hereunder, the prevailing party shall recover from the non-prevailing party its reasonable expenses, court costs, including taxed and untaxed costs, and reasonable attorneys’ fees, whether suit be brought or not

10. NOTICES. Any notice, consent or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile if receipt is acknowledged by the addressee, one day after being deposited for next-day delivery with a nationally recognized overnight delivery service or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Employer, at _________________________________________, and, if to the Employee, at his or her address or facsimile number appearing on the records of the Employer. Either the Employer or the Employee may change its or his or her address for this purpose from time to time by notice to the other. 11. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and bind the Employer and the Employee and their respective successors, assigns, heirs, and personal representatives. 12. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the Employer and the Employee and supersedes all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between them, with respect to the subject matter hereof.

13. SURVIVAL. All agreements, representations, warranties and acknowledgments herein shall survive any termination of the Employee's employment with the Employer for any reason.

14. THE EMPLOYER'S RIGHT TO TERMINATE. Nothing herein shall be interpreted to impair or otherwise affect the right and power of the Employer to terminate its employment of the Employee, which is at will. THE EMPLOYEE HEREBY WARRANTS AND ACKNOWLEDGES THAT HE OR SHE HAS CAREFULLY READ AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT. EMPLOYER: By: ________________________ Name: _____________________ Print Name: _________________
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Title: _______________________ EMPLOYEE: By: ________________________ Name: _____________________ Print Name: _________________

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DOCUMENT INFO
Description: A change of control agreement is an agreement between an employee and an employer safeguarding the remunerative rights of the employee in exchange for continued employment. This agreement is a group of mutual covenants designed to protect an employee in the event that the company undergoes a change of control so that the employee will be encouraged to remain in employment with the employer. If the employment is terminated under certain conditions, such as without cause or through involuntary termination, then the employee is entitled to receive certain benefits, such as a bonus. This document should be used by an employee or by an employer seeking to provide certain guarantees to an employee.
This document is also part of a package Business Planning Starter kit 22 Documents Included