Employee Option Acceleration Addendum
This is a form of Addendum that can be added to an employment agreement or employee offer letter. It is designed to accelerate the vesting of a portion of the employee’s options, in the event of a sale of the company and a termination of the employment of the employee without cause after such sale (a so-called “double trigger” event).
Employee Option Acceleration Addendum 1. effect: A. Change in Control means any of the following transactions: Definitions. For purposes of this Addendum, the following definitions shall be in
(i) a merger or consolidation approved by the Company’s shareholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the successor company are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction; or (ii) the sale, transfer or other disposition of all or substantially all of the Company's assets to any person, entity or group of persons acting in concert other than a sale, transfer or disposition to an entity, at least fifty percent (50%) of the combined voting power of the voting securities of which is owned by the Company or by shareholders of the Company in substantially the same proportion as their ownership of the Company immediately prior to such sale. However, the term Change in Control shall not include any transaction, the sole purpose of which is to change the state in which the Company is incorporated. B. Company shall mean [NAME OF COMPANY], a [STATE] corporation.
C. Incapacity means the inability of the Employee, as determined by a physician selected by the Company, by reason of any injury or illness, to properly perform Employee’s normal duties under this Agreement for a period of more than one hundred twenty (120) days. D. Employee means [NAME OF EMPLOYEE].
E. Good Reason means the Employee’s voluntary resignation within sixty (60) days following (a) a material reduction in Employee’s duties and responsibilities or the level of management to which she reports relative to the Employee’s duties and responsibilities in effect immediately prior to such reduction, (b) a reduction in Employee’s base salary by more than twenty percent (20%) relative to the Employee’s base salary immediately prior to such reduction, (c) a relocation of Employee’s principal place of employment by more than fifty (50) miles, (d) a material breach by the Company of any of its obligations under this Agreement and the failure of the Company to cure such breach within thirty (30) days after receipt of written notice from the Employee in which the actions or omissions constituting such material breach are specified. A reduction in the Employee’s base salary which occurs in connection with a salary reduction program applied to other officers and senior executives of the Company shall not constitute grounds for a resignation for Good Reason under clause (b) above.
F. Involuntary Termination means (i) the Company’s termination of the Employee’s employment for any reason other than a Termination for Cause, or (ii) the Employee’s voluntary resignation for Good Reason. An Involuntary Termination shall not include the termination of