A "change in control" clause is a contractual provision that specifies the consequences or required actions if there is a significant change in ownership or control of a company. This clause is often included to protect parties from potential negative impacts resulting from mergers, acquisitions, or significant shifts in the company's leadership or ownership structure.
Table of Contents
15 Change in control examples
Description
The Plan was previously amended and restated on each of April 29, 2009, July 29, 2009, January 15, 2010, October 25, 2011, May 18, 2021 and June 29, 2021 and is now further amended and restated in the form set forth herein on April 24, 2022. The purpose of the Plan is to provide for the payment of severance benefits to Potential Eligible Executives in the event their employment with the Parent or any Applicable Subsidiary is terminated involuntarily, as provided herein, and to encourage such executives to continue as employees in the event of a Change in Control.
(g)Change in Control means the consummation or effectiveness of any of the following events:
(i)The sale, exchange, lease or other disposition of all or substantially all of the assets of the Parent to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act;
(ii)A merger, reorganization, recapitalization, consolidation or other similar transaction involving the Parent in which the voting securities of the Parent owned by the shareholders of the Parent immediately prior to such transaction do not represent more than fifty percent (50%) of the total voting power of the surviving controlling entity outstanding, immediately after such transaction;
(iii)Any person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act, is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total voting power of the voting securities of the Parent (including by way of merger, takeover (including an acquisition by means of a scheme of arrangement), consolidation or otherwise);
Notwithstanding the foregoing, a restructuring for the purpose of changing the domicile of the Parent (including, but not limited to, any change in the structure of the Parent resulting from the process of moving its domicile between jurisdictions), reincorporation of the Parent, or other restructuring transaction involving the Parent (a “Restructuring Transaction”) will not constitute a Change in Control if, immediately after the Restructuring Transaction, the shareholders of the Parent immediately prior to such Restructuring Transaction represent, directly or indirectly, more than fifty percent (50%) of the total voting power of the surviving entity.
(h)Change in Control Period means the period beginning on the date that is six (6) months preceding the effective date of a Change in Control and ending on the date that is twenty-four (24) months following the effective date of the Change in Control.
For the avoidance of doubt, no enhanced benefits payable to an Eligible Executive due to a Termination Event occurring within a Change in Control Period (that is, benefits in excess of the benefits due upon a Termination Event outside a Change in Control Period) shall be paid prior to the effective date of a Change in Control.
This Amendment revises certain descriptions in the 2024 Proxy Statement of the treatment of certain equity awards upon a change in control of the Company. The Company reexamined such descriptions in the 2024 Proxy Statement and determined that the amendments described below are advisable to clarify that the treatment of equity awards upon a change in control of the Company remains as a “double trigger,” as was described in previous years’ proxy statements.
In particular, 2024 Proxy Statement disclosure regarding the potential vesting of certain equity compensation awards originally indicated that such awards were subject to “single trigger” vesting (generally automatically vesting upon the occurrence of a change in control), as opposed to the actual acceleration provisions, which operate as a “double trigger” (generally requiring that not only a change in control occur, but also a failure by the surviving company to continue the award following the change in control or a qualifying employment termination within two years after the change in control). The original 2024 Proxy Statement suggested that the previous “double trigger” acceleration provision had been amended in 2023, when in fact, the change in control-related acceleration provisions were not amended and remain the same as they were in 2022.
In addition, the table included in the original 2024 Proxy Statement under the heading “Potential Payments Upon Termination or Change in Control” inaccurately reflected that certain equity compensation awards would automatically accelerate upon a change in control (consistent with a “single trigger” acceleration provision, as opposed to the “double trigger” provision that continues to apply to all outstanding equity compensation awards). These tables have been revised in this amended filing to reflect that no equity award acceleration automatically occurs upon a change in control, consistent with the continuing “double trigger” feature that generally would accelerate the awards only if such awards are not continued by the surviving company following the change in control or upon a qualifying termination occurring within two years after a change in control.
(i) Any increase to the cash severance benefits payable on account of the occurrence of a Termination Event during a Change in Control Period but preceding the effective date of the Change in Control shall be paid on the later of (A) five (5) business days following the effective date of the Change in Control or (B) the first payroll date that occurs after the effective date of the Change in Control (provided such date occurs after the date on which the Release and Covenants Document become irrevocable), and otherwise in accordance with the payout schedule set forth in the applicable Benefits Schedule.
Change in Control Agreement with President and Chief Executive Officer
On March 8, 2021, Tractor Supply Company (the “Company”) and its President and Chief Executive Officer, Harry A. Lawton III, entered into a change in control agreement (the “CEO Change in Control Agreement”), with an effective date of March 1, 2021. The CEO Change in Control Agreement is effective through February 28, 2023.
The CEO Change in Control Agreement replaces the change in control agreement, dated December 4, 2019, by and between the Company and Mr. Lawton (the “Prior CEO Agreement”), which expired by its terms on February 28, 2021. Subject to the exceptions in the following sentence, the terms of the CEO Change in Control Agreement are substantially similar to the terms of the Prior CEO Agreement, as described in the Company’s definitive proxy statement for its 2020 annual meeting of stockholders, filed with the Securities and Exchange Commission on March 23, 2020 (the “2020 Proxy Statement”).
On March 8, 2021, the Company and each of Kurt D. Barton, Robert D. Mills, John P. Ordus, Jonathan S. Estep, Melissa D. Kersey, Colin W. Yankee, Noni L. Ellison, Christi C. Korzekwa, and Matthew L. Rubin (collectively, the “Executive Officers”), entered into change in control agreements (collectively, the “Executive Officer Change in Control Agreements”), with an effective date of March 1, 2021. The Executive Officer Change in Control Agreements are effective through February 28, 2023. The Executive Officer Change in Control Agreements replace the prior change in control agreements for the Executive Officers, which agreements expired by their terms on February 28, 2021. The terms of the Executive Officer Change in Control Agreements are substantially similar to the terms of the prior change in control agreements for the Company’s executive officers (other than Mr. Lawton), as described in the 2020 Proxy Statement.
Change in Control Agreement with William C. McCamy
On May 1, 2023 ("the McCamy Effective Date"), Thorne HealthTech, Inc. (the "Company") entered into a change in control agreement with William C. McCamy, the Company's President (the "McCamy Change in Control Agreement"). The McCamy Change in Control Agreement provides the terms and conditions pursuant to which Mr. McCamy will be entitled certain benefits in the event Mr. McCamy's termination of employment with the Company subsequent to a Change in Control (as defined within the McCamy Change in Control Agreement). The term of the McCamy Change in Control Agreement is thirty-six months from the McCamy Effective Date. Mr. McCamy has served as the Company's President since 2010.
If, as a result of a Change in Control, Mr. McCamy's employment with the Company is terminated, the McCamy Change in Control Agreement provides for (i) payment of an amount equal to the sum of one year of Mr. McCamy's annual compensation based on the most recent aggregate base salary paid to Mr. McCamy in the twelve month period immediately preceding termination and (ii) continuation of all employee benefits, including life insurance, medical, health, and disability policies, plans, programs, or benefits that were in effect immediately prior to the Change in Control.
Change in Control Agreement with Saloni S. Varma
On May 10, 2023 ("the Varma Effective Date"), the Company entered into a change in control agreement with Saloni S. Varma, the Company's Chief Financial Officer ("CFO") and member of the Company's Board of Directors (the "Varma Change in Control Agreement"). The Varma Change in Control Agreement provides the terms and conditions pursuant to which Mrs. Varma will be entitled certain benefits in the event Mrs. Varma's termination of employment with the Company subsequent to a Change in Control (as defined within the Varma Change in Control Agreement). The term of the Varma Change in Control Agreement is thirty-six months from the Varma Effective Date. Mrs. Varma has served as the Company's CFO since April 2023 and has served as a member of the Company's Board of Directors since September 2021.
If, as a result of a Change in Control, Mrs. Varma's employment with the Company is terminated, the Varma Change in Control Agreement provides for (i) payment of an amount equal to the sum of one year of Mrs. Varma's annual compensation based on the most recent aggregate base salary paid to Mrs. Varma in the twelve month period immediately preceding termination and (ii) continuation of all employee benefits, including life insurance, medical, health, and disability policies, plans, programs, or benefits that were in effect immediately prior to the Change in Control.
The foregoing description of each of the McCamy Change in Control Agreement and the Varma Change in Control Agreement is a summary and is qualified in its entirety by the terms of each such agreement, a copy of which is attached as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and is incorporated herein by reference.
5.Severance Outside the Change in Control Period. In the event a Terminating Event occurs at any time other than during the Change in Control Period, subject to the Employee signing the Separation Agreement and Release and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination (or such shorter time period set forth in the Separation Agreement and Release), the following shall occur:
Change in Control Payment. In the event a Terminating Event occurs on or within the 12 months immediately after a Change in Control (such 12-month period, the “Change in Control Period”), subject to the Employee signing a separation agreement containing, among other provisions, a general release of claims in favor of the Company and related persons and entities (but other than claims or future claims (i) for the payments to be made, benefits to be provided and equity awards to be accelerated to or with regard to the Employee pursuant to this Agreement, (ii) for indemnification at law, pursuant to the Company’s certificate of incorporation and/or by-laws, any other written agreement between the Company and the Employee, and any governing document concerning a group benefit plan provided by or sponsored by the Company and in which the Employee is a participant, administrator or fiduciary, (iii) as the holder of securities of the Company, or (iv) for insurance coverage or costs of defense available to the Employee under any policy maintained by the Company), confidentiality, return of property and non-disparagement, in a form and manner reasonably satisfactory to the Company (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination (or such shorter time period set forth in the Separation Agreement and Release), the following shall occur:
“Change in Control” refers to any event that results in a significant shift in the ownership or management structure of a company. It typically involves situations such as mergers, acquisitions, or reorganizations where a new party gains control over the decision-making process or assets of the company. Change in control clauses are important because they protect stakeholders from potential risks associated with such shifts.
When should I use a Change in Control clause?
You should consider using a “Change in Control” clause in contracts to safeguard interests during any transaction or agreement that could leave one party vulnerable due to a shift in company control. This includes:
Merger & Acquisition deals
Investment agreements
Employment contracts, particularly for executives
Licensing agreements
Franchise agreements
Change in control provisions ensure that all parties are aware of their rights and obligations if the ownership or control of the company changes.
How do I write a Change in Control clause?
When drafting a “Change in Control” clause, it is crucial to clearly define what constitutes a change in control, outline the rights and obligations of parties involved, and specify any actions that must occur upon such change. A typical clause might look like this:
“For purposes of this Agreement, a ‘Change in Control’ shall mean the occurrence of any of the following events: (i) the acquisition by any individual, entity, or group of beneficial ownership of 50% or more of the outstanding shares or voting power of the company; (ii) a merger or consolidation resulting in the company’s shareholders owning less than 50% of the surviving entity; or (iii) the sale or transfer of all or substantially all of the company’s assets. Upon a Change in Control, the parties agree to [describe specific consequences or actions].”
Which contracts typically contain Change in Control clauses?
Change in Control clauses are typically included in the following contracts:
Employment Contracts: Especially for executives or key personnel to ensure their benefits or stock options are protected.
Loan Agreements: To protect lenders by triggering default or acceleration clauses upon a change in borrower’s control.
Shareholder Agreements: To protect existing shareholders’ interests.
Confidentiality Agreements: Ensuring that sensitive information remains protected if the company’s control changes.
Supply and Distribution Agreements: To manage the risks associated with potentially incompatible new owners.
These clauses ensure clarity and protect the interests of all parties involved in contractual agreements affected by significant changes in company structure or ownership.
Analyze your contracts. Extract important clauses.
<
Try our AI contract analysis and extract important clauses and information from existing contracts.
A "change of control" clause in a contract is designed to protect parties by outlining specific terms and conditions that come into effect when there is a significant shift in ownership or control of one party involved in the agreement, such as through a merger, acquisition, or sale. This clause often permits the other party to terminate the contract, renegotiate terms, or take other defined actions if such a change occurs, ensuring transparency and continuity amid organizational transitions.
A change order clause in a contract outlines the procedures for making amendments to the original agreement, including alterations to scope, cost, or timeline. It specifies how changes should be documented, authorized, and implemented to ensure clear communication and mutual consent between the parties involved.
A Choice of Law clause specifies which jurisdiction's laws will govern the interpretation and enforcement of the contract. This clause provides clarity and predictability by pre-determining the legal framework that will apply in case of disputes.
15 example clauses
Schedule demo
Fill out the form and we will get in touch with you to give you a personal, customized demo of fynk.
Greetings!
I'm Markus, co-founder of fynk. After you've submitted the form, I'll swiftly get in touch with you.
Also, right after you submit your details, you can pick a time that works best for you for our meeting.
