Double Trigger Acceleration Clause Template

Create a comprehensive double trigger acceleration clause that protects key employees during company transitions while maintaining investor appeal. This template ensures clear vesting terms and balanced interests between stakeholders.

Double Trigger Acceleration Clause

A double trigger acceleration clause is a critical provision in equity agreements that requires two specific events to occur before accelerating the vesting of an employee's stock options or equity. This protection mechanism is particularly valuable for founders, executives, and key employees during company transitions while remaining attractive to potential investors and acquirers.

What This Template Is For

This template helps companies create a balanced double trigger acceleration clause that protects key employees while maintaining company attractiveness to potential acquirers. It specifically addresses the acceleration of equity vesting upon both a change in control and subsequent qualifying termination, ensuring fair treatment of employees during corporate transitions.

When To Use This Template

Use this template when:

  • Drafting employment agreements for executives or key employees
  • Negotiating equity compensation packages
  • Preparing for potential merger or acquisition scenarios
  • Updating existing equity agreements to include protection mechanisms

How To Customize It

To customize this template effectively:

  1. Define the specific change of control events that constitute the first trigger
  2. Specify the timeframe for the second trigger (typically 12-18 months)
  3. Detail what constitutes a qualifying termination (e.g., without cause, for good reason)
  4. Determine the acceleration percentage (partial or full)
  5. Adjust the protection window before and after the change of control

Common Use Cases

Common applications include:

  • Executive employment agreements
  • Founder equity protection
  • Key employee retention plans
  • Merger and acquisition preparations
  • Startup equity incentive plans

Best Practices

Follow these guidelines for effective implementation:

  • Keep the triggering event definitions clear and specific
  • Include reasonable time windows for both triggers
  • Define 'cause' and 'good reason' precisely
  • Balance employee protection with company flexibility
  • Consider investor and acquirer perspectives

Template Variations

Consider these variations based on specific needs:

  • Partial vs. full acceleration provisions
  • Different time windows for qualifying events
  • Modified definitions of change in control
  • Varied treatment of different equity types

Success Stories

Real-world examples include:

  • Tech startup protecting key engineers during acquisition
  • SaaS company retaining executive team post-merger
  • Biotech firm ensuring research team continuity

Frequently Asked Questions

What's the difference between single and double trigger acceleration?

Single trigger requires only one event (typically a change in control), while double trigger requires two events (usually change in control plus qualifying termination).

How long should the protection period be?

Typically 12-18 months following the change in control, with some agreements including a 3-month pre-closing window.

Does this affect company valuation?

Double trigger acceleration is generally viewed more favorably by acquirers than single trigger, as it helps retain key employees post-acquisition.

What constitutes a 'change in control'?

Usually defined as a sale of all/substantially all company assets, merger, or stock sale resulting in over 50% ownership change.

Can this clause be modified after implementation?

Yes, but modifications typically require mutual agreement and should be documented properly.