Double trigger acceleration is a contractual provision commonly found in employee stock or option agreements, which accelerates vesting based on the occurrence of two specific events, typically a change in company control followed by an employee's involuntary termination or departure for 'good reason.' This clause is designed to provide financial security to key employees in the event of company acquisition while also protecting the acquiring company from immediate mass vesting.
The stock option is fully vested. Each RSU represents a contingent right to receive 1 share of the Issuer's Common Stock upon vesting and settlement for no consideration. 1/16 of the shares subject to the RSUs vest in equal installments on each quarterly anniversary date beginning February 15, 2021, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double-trigger acceleration. 1/16 of the shares subject to the RSUs vest in equal installments on each quarterly anniversary date following the vesting commencement date of February 15, 2019, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double-trigger acceleration. 1/16 of the shares subject to the RSUs vest in equal installments on each quarterly anniversary date following the vesting commencement date of May 15, 2020, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double-trigger acceleration. 1/16 of the shares subject to the RSUs vest in equal installments on each quarterly anniversary date following the vesting commencement date of November 15, 2020, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double-trigger acceleration. 1/16 of the shares subject to the RSUs vest in equal installments on each quarterly anniversary date following the vesting commencement date of November 15, 2021, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double-trigger acceleration. One half of the shares subject to the RSUs will vest on each annual anniversary date following the vesting commencement date of February 15, 2022, until such time as the RSUs are 100% vested, subject to the continuing employment of the Reporting Person on each vesting date. The RSUs are subject to double - trigger acceleration.
8. Conditions to Receipt of Severance Benefits and Double-Trigger Acceleration. To be eligible for the Severance Benefits pursuant to Section 7.2 and the Double-Trigger Acceleration pursuant to Section 7.3 above, Executive must satisfy the following release requirement (the “Release Requirement”): return to the Company a signed and dated general release of all known and unknown claims in a termination agreement acceptable to the Company (the “Release”) within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following Executive’s termination date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date of the Release, the “Release Effective Date”). No Severance Benefits or Double-Trigger Acceleration will be provided hereunder prior to the Release Effective Date. Accordingly, if Executive refuses to sign and deliver to the Company an executed Release or signs and delivers to the Company the Release but exercises Executive’s right, if any, under applicable law to revoke the Release (or any portion thereof), then Executive will not be entitled to any severance, payment or benefit under this Agreement.
In addition, subject to approval by the Company’s board of directors and due execution of the appropriate agreements, we also anticipate that you will be granted profits interests in DiscoverOrg (or comparable phantom equity), representing 40 basis points in the combined company and struck at the then-current fair market value. These interests would vest 50% on the 2-year anniversary of the closing and 1/24th each month thereafter for the subsequent two years. If there is an IPO or liquidity event sooner than 2 years from February 1, 2019, the vesting will accelerate, and will otherwise be subject to double trigger acceleration. As you know, the options that you held in Zoom Information, Inc. (“Zoom”) that remain unvested at the time of closing of its acquisition by DiscoverOrg are being converted into a right to cash payments that will be made as those unvested shares would have vested under the Zoom plan. Those payments will be subject to the same acceleration as under the Zoom plan (double trigger acceleration), and the terms will be set forth in an appropriate agreement to be executed by you.
Mr. Kim’s Amendment also provides for “double trigger” acceleration of unvested equity awards in the case of certain employment terminations that occur within a specified period of time following a change of control. Mr. McHugh’s Amendment also provides for (i) “double trigger” acceleration of unvested equity awards in the case of certain employment terminations that occur within a specified period of time following a change of control and (ii) that Mr. McHugh will be eligible for an annual discretionary cash incentive bonus equal to forty-five percent (45%) of his base salary (increased from forty percent (40%) of his base salary), based upon Mr. McHugh’s achievement of certain business and individual performance objectives and as determined by the Company’s compensation committee.
Pursuant to the Restricted Stock Award Agreement and the Performance-Based Restricted Share Unit Award Agreement, an officer will completely forfeit his or her right in respect of the award if such officer’s employment with the Company terminates for any reason prior to the applicable vesting date, with certain exceptions. All the awards are generally subject to a “double-trigger” acceleration of vesting if there is a “change of control” of the Company. The Performance-Based Awards are not subject to “double-trigger” acceleration of vesting if such awards are neither continued following a “change of control” nor assumed or converted by the successor entity.
At the discretion of the Board, during the employment term, Ms. Williams will be eligible to receive an annual equity grant with a target equity value of $1,800,000 (the “Annual Equity Incentive”) based on approval by the Compensation Committee of the Board and the Board and subject to the terms and conditions of the Company’s Equity Incentive Plan and corresponding form stock agreement. To the extent that any Annual Equity Incentive is subject to vesting conditions, then in addition to whatever other acceleration terms may be contained in the applicable award agreement, such vesting will accelerate in full upon a termination of Ms. Williams’ employment by the Company without Cause or a resignation by Ms. Williams for Good Reason (each as defined in the Employment Agreement), in each case, within the four-month period before or 12-month period after a Change of Control (as defined in the Employment Agreement), subject to Ms. Williams’ execution and non-revocation of a release of claims (such acceleration, a “Double Trigger Acceleration”).
The time-based restricted stock unit awards will vest ratably over three years, provided the officer remains employed with the Company through each vesting date. The NEOs’ equity award agreements governing the time-based restricted stock unit awards provide for a double trigger acceleration of vesting; that is, the awards will not automatically accelerate upon a change in control and will only vest prior to the scheduled vesting date if both a change in control and a qualifying termination event occur. In addition, the NEOs’ RSU award agreements provide for certain favorable vesting terms upon a qualifying termination event occurring without a change in control.
(c) Compensation and Benefits Upon Termination Without Cause or for Good Reason During a Sale Event Window. If your employment is terminated by the Company without Cause or by you for Good Reason, in either case, during a Sale Event Window, then, in addition the Double-Trigger Acceleration, you shall be entitled to receive the Accrued Benefit and the Severance Amount.
(c) Compensation and Benefits Upon Termination Without Cause or for Good Reason During a Sale Event Window. If your employment is terminated by the Company without Cause or by you for Good Reason, in either case, during a Sale Event Window, then, in addition the Double-Trigger Acceleration, you shall be entitled to receive the Accrued Benefit and the Severance Amount.
g.each unvested RSU that was outstanding immediately prior to the Effective Time and was subject to acceleration based on a change in control of Limeade and termination of the holder’s employment in accordance with such holder’s employment agreement (an “Accelerable RSU”) was automatically cancelled and converted into the contingent right to receive an amount in cash, without interest, equal to the U.S. Dollar Merger Consideration, less any withholding taxes required to be withheld by applicable law, subject to the same terms and conditions concerning forfeiture and double trigger acceleration as applied to the Accelerable RSU prior to the Effective Time.
d.each unvested Option that was outstanding immediately prior to the Effective Time and was subject to acceleration upon a change in control of Limeade and termination of the holder’s employment in accordance with such holder’s employment agreement (an “Accelerable Option”) was automatically cancelled and converted into the contingent right to receive an amount in cash, without interest, equal to the product of (i) the total number of shares of Common Stock subject to such Accelerable Option multiplied by (ii) the excess, if any, of the U.S. Dollar Merger Consideration over the exercise price per share under such Accelerable Option, less any withholding taxes required to be withheld by applicable law, subject to the same terms and conditions concerning forfeiture and double trigger acceleration as applied to the Accelerable Option prior to the Effective Time;
Double trigger acceleration refers to a provision typically found in employment agreements and stock option agreements. It ensures that an employee receives accelerated vesting of their unvested equity upon the occurrence of two specific events (or “triggers”).
The first trigger is usually a change in control of the company, such as a merger or acquisition. The second trigger is often the termination of the employee without cause, or the employee’s resignation for good reason, within a certain period following the change in control.
You should consider using double trigger acceleration in scenarios where you want to protect employees in case of a significant corporate event, such as a merger or acquisition, while also ensuring they remain motivated to stay with the new entity. This provision is particularly useful:
To write a double trigger acceleration clause, specify the conditions under which accelerated vesting will occur. Here is a basic example:
In the event that (i) there is a Change in Control, and (ii) within twelve (12) months following such Change in Control, the Employee’s employment is terminated by the Company without Cause or by the Employee for Good Reason, then [percentage]% of the then-unvested shares subject to this Option shall immediately vest and become exercisable upon the date of such termination.
It’s important to define key terms such as “Change in Control,” “Cause,” and “Good Reason” clearly within the agreement.
Double trigger acceleration provisions are most commonly found in the following types of contracts:
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