Distribution Upon Change in Control Clause Samples
The 'Distribution Upon Change in Control' clause defines how assets, payments, or benefits are to be distributed if there is a significant change in the ownership or control of a company, such as through a merger, acquisition, or sale of a controlling interest. Typically, this clause outlines the specific triggers that constitute a change in control and details the process for distributing funds or benefits to stakeholders, such as shareholders, employees, or contract parties. Its core practical function is to provide certainty and protect the interests of affected parties by ensuring that distributions are handled fairly and transparently in the event of major corporate changes.
Distribution Upon Change in Control. In the event of the occurrence of a Change in Control of the Employer or a member of the Employer’s controlled group (as designated by the Employer in the Adoption Agreement) to the extent permitted under Section 409A of the Code and the regulations and other guidance thereunder, distributions shall be made to Participants to the extent elected by the Employer in the Adoption Agreement, in the form elected by the Participants as if a Termination Date had occurred with respect to each Participant, or as otherwise specified by the Employer in the Adoption Agreement. The Change in Control shall relate to: (i) the corporation for whom the Participant is performing services at the time of the Change in Control event; (ii) the corporation that is liable for the payment from the Plan to the Participant (or all corporations so liable if more than one corporation is liable); (iii) a corporation that is a majority shareholder of a corporation described in (i) or (ii) above; or (iv) any corporation in a chain of corporations in which each such corporation is a majority shareholder of another corporation in the chain, ending in a corporation described in (i) or (ii) above, as elected by the Employer in the Adoption Agreement. A “majority shareholder” for these purposes is a shareholder owning more than 50% of the total fair market value and total voting power of such corporation. Attribution rules described in section 318(a) of the Code apply to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option. Notwithstanding the foregoing, if a vested option is exercisable for stock that is not substantially vested (as defined in section 1.83-3(b) and (j) of the Code), the stock underlying the option is not treated as owned by the individual who holds the option. If plan payments are made on account of a Change in Control and are calculated by reference to the value of the Employer’s stock, such payments shall be completed not later than 5 years after the Change in Control event. To the extent designated by the Employer in the Adoption Agreement, the Change in Control shall occur upon the date that: (v) a person or “Group” (as defined in Treasury Regulation Sections 1.409A-3(i)(5)(v)(B) and (vi)(D)) acquires more than 50% of the total fair market value or voting power of stock of the corporation designated in (i) through (iv) above; (vi) a person or Group acquires ownership (“effective control”) of stock of...
Distribution Upon Change in Control. Notwithstanding Section 1.2(a), Shares shall be distributed to Participant (or in the event of Participant’s death, to his estate) with respect to such Participant’s vested Units upon a Change in Control (after giving effect to any accelerated vesting of such Units pursuant to Exhibit B to the Grant Notice as a result of such Change in Control) (so long as such Change in Control also constitutes a change in the ownership or effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the Code and Section 1.409A-3(i)(5) of the Treasury Regulations) and any distribution of Shares upon a Change in Control shall occur immediately prior to the Change in Control.
Distribution Upon Change in Control. In the event of a Change in Control of the Company, each Participant in the Plan, and each Participant or beneficiary receiving payments from the Plan, shall receive an immediate cash lump sum payment of the amount allocated to his Plan Account as of the last day of the month immediately preceding the date of such Change in Control. Such payment shall be made no later than 30 days following the date of the Change in Control on a date determined by the Company. Provided however, that payment shall be made upon a Change in Control only if the event is a "change in control" within the meaning of Code section 409A and the regulations and other guidance promulgated thereunder.
Distribution Upon Change in Control