Employment agreements with key members of management are important for continuity of management as well as the protection of the company. The following is an extensive employment agreement that covers the employee’s employment, relocation and non-compete.
Typically, an employment agreement of this type is used for a Vice President level or above position in the organization. The following is an example of an employment agreement.
EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (this “Agreement”) is made effective as of _____________, 20XX and is by and COMPANY NAME, a STATE OF INCORPORATION, TYPE OF COMPANY “Company”) and EMPLOYEE NAME (“EMPLOYEE”).
Recitals A. The Company desires to employ EMPLOYEE to serve as the Vice President Sales and Marketing, and EMPLOYEE desires to continue to serve the Company in such capacity. B. The Company and EMPLOYEE each desires to set forth in writing the terms and conditions of their understandings and agreements with respect to the employment of EMPLOYEE as Vice President Sales and Marketing.
Agreement In consideration of the mutual covenants and obligations contained herein, the Company hereby agrees to employ EMPLOYEE and EMPLOYEE hereby accepts such employment upon the terms and conditions set forth in this Agreement:
1. Employment; Duties; Compensation. (a) Term. The Company shall employ EMPLOYEE, and EMPLOYEE shall serve the Company, for a term commencing on the date hereof and continuing until this Agreement is terminated pursuant to the provisions of Section 3 hereof (the “Term of Employment”).
(b) Duties. During the Term of Employment, EMPLOYEE shall perform such duties and responsibilities as are set forth on Exhibit A hereto. During the Term of Employment and except for absences due to vacation and illness in accordance with the policies of the Company, EMPLOYEE shall devote substantially all of his time during normal business hours to the business affairs of the Company.
(c) Compensation. As compensation for the services to be rendered by EMPLOYEE during the Term of Employment and the other obligations undertaken by EMPLOYEE hereunder, EMPLOYEE shall be entitled to the following compensation:
(i) Salary. During the Term of Employment, the Company shall pay to EMPLOYEE an annual base salary of not less than $ XXX,XXX (as adjusted as set forth below from time to time, the “Base Salary”). The Base Salary will be paid by the Company in equal installments according to the Company’s customary payroll practices, but in any event not less frequently than monthly.
(ii) Incentive Compensation. During the Term of Employment, EMPLOYEE shall participate in the incentive compensation and/or profit sharing plan(s), if any, set forth on Exhibit B hereto (the “Bonus Plan(s)”) on the terms set forth in such Bonus Plan(s); provided that, prior to the participation by EMPLOYEE in any Bonus Plan in any period, EMPLOYEE shall be subject to a performance review by the Company in accordance with its practices as then in effect from time to time and shall satisfy all conditions necessary for participation in the Bonus Plan.
(iii) Benefits. During the Term of Employment, the Company shall provide EMPLOYEE with the benefits set forth on Exhibit C hereto (the “Benefits”) on the terms set forth in the applicable plan documents, benefit documents, employee handbooks and/or employee manuals as then in effect from time to time.
(iv) Automobile Allowance. EMPLOYEE shall also receive a monthly automobile allowance of AMOUNT and No/100 Dollars ($ X00.00) per month, said amount to be paid to EMPLOYEE as part of his regular monthly compensation, and subject to income taxes, withholdings and deductions.
(v) Temporary Living Expenses and Relocation Allowance. Prior to EMPLOYEE’ move of his permanent residence under this Agreement, the Company shall secure temporary living arrangements for EMPLOYEE consisting of a one bedroom apartment for a period not to exceed six (6) months. The Company shall also pay EMPLOYEE a relocation allowance of AMOUNT and No/100 Dollars ($ XX,000.00) (the “Relocation Allowance”), said amount to be paid to EMPLOYEE in lump sum payment, less applicable income taxes, withholdings and deductions. For purposes of this provision, the Relocation Allowance will be paid to EMPLOYEE upon completion of his move to a permanent residence within a one (1) hour drive of NEW OFFICE LOCATION. Should EMPLOYEE not move and maintain his permanent residence within a one (1) hour drive of NEW OFFICE LOCATION on or before the date that is one year from the date of this Agreement, he shall not be eligible for the Relocation Allowance.
(d) Business Expenses. The Company shall reimburse EMPLOYEE for all business expenses that are reasonable and necessary and incurred by EMPLOYEE while performing his duties under this Agreement, upon presentation of expense statements, receipts and/or vouchers or such other information and documentation as the Company may reasonably require.
2. Confidentiality; Non-Competition; Non-Solicitation. (a) Company Property. All written materials, records, data and other documents prepared or possessed by EMPLOYEE during EMPLOYEE’s employment by the Company are and shall be the Company’s property. All information, ideas, concepts, improvements, discoveries and inventions that EMPLOYEE conceives of, makes, develops or acquires, or has conceived of, made, developed or acquired, individually or with others, during EMPLOYEE’s employment (whether during business hours and whether or not on Company’s premises), that directly relate to or are derivatives of the Company’s business, products or services are the Company’s sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps and other documents, data or materials of any type embodying such information, ideas, concepts, improvements, discoveries and inventions are and shall be the Company’s property. EMPLOYEE does not own or have any right to, nor does EMPLOYEE claim to own or have any right to, any concepts, improvements, discoveries or inventions, or any memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps or other documents, data or materials of any type embodying such concepts, improvements, discoveries or inventions (collectively, the “Company Property”), to the extent competitive with the business of the Company as described in Section 2(c). At the termination of EMPLOYEE’s employment for any reason, EMPLOYEE shall return to the Company all (i) Company Property, (ii) of the Company’s documents, (iii) of the Company’s data and (iv) other property of the Company, in each case in EMPLOYEE’s possession or under EMPLOYEE’s control.
(b) Confidential Information. (i) Non-Disclosure. EMPLOYEE acknowledges that the Company’s business is highly competitive and that the Company will provide EMPLOYEE with access to Confidential Information (as defined below). EMPLOYEE acknowledges that this Confidential Information constitutes a valuable, special and unique asset the Company uses to obtain a competitive advantage over competitors. EMPLOYEE further acknowledges that protecting such Confidential Information against unauthorized disclosure and use is critically important to the Company in maintaining its competitive position. EMPLOYEE will not, at any time during or after EMPLOYEE’s Term of Employment, make any unauthorized disclosure of any Confidential Information or make any use thereof, except in the carrying out of EMPLOYEE’s employment responsibilities to the Company, and further shall take all reasonable precautions to prevent the inadvertent or accidental disclosure of any Confidential Information. EMPLOYEE also agrees to preserve and protect the confidentiality of third party confidential information to the same extent, and on the same basis, as the Company’s Confidential Information. As used in this Agreement, the term “Confidential Information” shall mean information of a confidential or secret nature that relates to the technology, intellectual property, customers, employees, plans, products, research and development, financial affairs or other aspects of the business of the Company or of any other party with whom the Company agrees to hold such information of such party in confidence, whether having existed, now existing, or to be developed or created during EMPLOYEE’s Term of Employment, whether tangible or intangible, whether or not marked as confidential, and whether or how stored, compiled or memorialized physically, electronically, graphically, photographically or in writing.
(ii) Return. EMPLOYEE promptly shall return to the Company all Confidential Information at any time upon the request of the Company, and in any event (and without such request) upon the termination of EMPLOYEE’s employment with the Company. EMPLOYEE shall not retain any copies or other physical embodiments of any Confidential Information after the termination for any reason of EMPLOYEE’s employment with the Company.
(c) Non-Competition. (i) Prohibition. During the period commencing on the date hereof and continuing through the 1st anniversary of the termination for any reason of EMPLOYEE’s employment with the Company, EMPLOYEE shall not, directly or indirectly, alone or as a partner, founder, joint venture, officer, director, employee, consultant, agent, independent contractor or stockholder of any company or business, whether now or hereafter existing, compete with the Company with respect to any of the Company Activities in the Geographic Territory. Notwithstanding the foregoing, EMPLOYEE’s ownership of not more than 1% of the shares of stock of any corporation having a class of equity securities actively traded on a national securities exchange or on the Nasdaq Stock Market shall not be deemed to violate the prohibitions of this paragraph. EMPLOYEE acknowledges that this covenant will not impair EMPLOYEE from becoming gainfully employed, or otherwise earning a livelihood following termination of employment with the Company. EMPLOYEE further acknowledges that if a court of competent jurisdiction finds this non-competition provision invalid or unenforceable due to unreasonableness in time, geographic scope, or scope of the Company’s business, then such court will interpret and enforce this provision to the maximum extent that such court deems reasonable.
(ii) Exceptions. EMPLOYEE shall not be considered to have violated this Section 2(c) if there is a Sale (as defined below) of the Company and EMPLOYEE becomes an employee of the purchasing entity. As used in this Agreement, “Sale” shall mean the sale of more than fifty percent (50%) of the equity of the Company, a merger of the Company with an entity the equity of which after the merger the stockholders of the Company immediately prior to such merger own less than fifty percent (50%), or the sale of substantially all of the assets of the Company, in any case to a person or entity not affiliated with the Company or its parent company or any of their respective subsidiaries or other affiliates, shareholders, directors or officers. A recapitalization or change of form of the Company shall not be considered a Sale.
(iii) Defined Terms. As used in this Agreement, (A) “Geographic Territory” means the geographic areas in which the Company is conducting the Company Activities as of the last day of EMPLOYEE’s Term of Employment; (B) “Company Activities” means, collectively, the manufacture, production, design, engineering, importation, purchase, offering, providing, marketing, sale, distribution, research or development of all products or services by the Company at any time during EMPLOYEE’s Term of Employment; and (C) “Active Prospect” means a person or other entity to whom the Company made a proposal, or with whom an employee of the Company met, for the purpose of seeking to provide products or services to that person or entity, at any time within the twelve (12) months immediately prior to the last day of the Term of Employment.
(d) Non-Solicitation. EMPLOYEE agrees that any attempt on his part to induce others to leave the Company’s employ, or any effort by EMPLOYEE to interfere with the Company’s relationship with its other employees, independent contractors, vendors, clients or customers, would be harmful and damaging to the Company. Therefore, EMPLOYEE agrees that during the period commencing on the date hereof and continuing through the 1st anniversary of the termination for any reason of EMPLOYEE’s employment with the Company, EMPLOYEE shall not, and shall not facilitate, encourage or solicit others to: (i) solicit or accept orders or business of any kind relating to any Company Activity from any customer or Active Prospect of the Company within the Geographic Territory, except in furtherance of the Company’s business as an employee of the Company; (ii) knowingly induce or attempt to induce any customer of the Company to terminate or reduce its relationship with the Company, or otherwise interfere with, impair, disrupt or damage the Company’s relationship with any customer or Active Prospect of the Company; (iii) recruit or solicit any person who is or was employed by the Company at any time during EMPLOYEE’s Term of Employment or thereafter, or in any manner otherwise seek to induce any such person to leave his or her employment with the Company; (iv) knowingly induce or attempt to induce any independent contractor, consultant, supplier or vendor to terminate its relationship with the Company, or otherwise intentionally interfere with, impair, disrupt or damage the Company’s relationship with any such independent contractor, consultant, supplier or vendor; or (v) incorporate or otherwise create any business organization utilizing any name which is confusingly similar to that of the Company.
(e) No Constraints. EMPLOYEE is not a party to, or otherwise bound by, any employment contract, patent disclosure agreement, proprietary information agreement, noncompetition agreement or any other contract or agreement or any restrictive covenant relating to the right of EMPLOYEE to be employed by or provide services to the Company.
3. Termination. (a) Termination. The employment of EMPLOYEE under this Agreement shall be terminated: (i) immediately upon the death of EMPLOYEE without further action by the Company; (ii) immediately upon written notice of termination for Cause (as defined below) by the Company to EMPLOYEE; or (iii) upon thirty (30) days’ prior written notice by the Company for termination without Cause.
(b) As used in this Agreement, the term “Cause” means (i) EMPLOYEE’ continued failure to perform his duties and responsibilities in a manner satisfactory to the President and Chief Executive Officer of the Company; (ii) EMPLOYEE’s engagement in willful, reckless or grossly negligent misconduct that is materially injurious to the Company or any of its affiliates, monetarily or otherwise; (iii) except as provided by (iv), the conviction, or plea of guilty or nolo contendre, of EMPLOYEE of a crime involving a felony; (iv) the charging of EMPLOYEE with an act of criminal fraud, misappropriation or personal dishonesty; (v) a material breach by EMPLOYEE of any provision of this Agreement; or (vi) drug or alcohol abuse (legal or illegal) by EMPLOYEE that materially impairs EMPLOYEE’s ability to perform his duties hereunder and that is not corrected within 15 days following written notice thereof to EMPLOYEE by the Company (except that, after the second occurrence of such abuse followed by notice and cure under this section, no cure period will apply and EMPLOYEE can be terminated immediately).
(c) Severance Pay. In the event EMPLOYEE is terminated Without Cause and (i) such termination is not, in the Company’s judgment, in connection with the sale, the Company shall pay EMPLOYEE twelve (12) months severance pay, or (ii) such termination is, in the Company’s judgment, in connection with the Sale of the Comapny, the Company shall pay EMPLOYEE six (6) months severance pay. This Severance Pay will based upon his current regular monthly base salary, and does not include the automobile allowance, incentive payments or commission payments, and will be paid to EMPLOYEE through the Company’s regular payroll procedures, less applicable income taxes, withholdings and deductions.
4. Miscellaneous. (a) Amendment. This Agreement may be amended only by a written document executed by each of the parties to this Agreement. (b) Entire Agreement. This Agreement and the other agreements, plan documents and similar documents referred to herein or in the Exhibits hereto set forth the entire understanding of the parties to this Agreement regarding the subject matter hereof and supersede all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the parties regarding the subject matter hereof. (c) Notices. Any notice, request, consent and other communication required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given (i) when received if personally delivered or delivered by confirmed facsimile, (ii) within 1 day after being sent by recognized overnight delivery service, or (iii) within 5 days after being sent by registered or certified mail, return receipt requested, postage prepaid, to the parties (and to the persons to whom copies shall be sent) at their respective addresses set forth below.
If to the Company: COMPANY NAME, COMPANY ADDRESS If to EMPLOYEE: EMPLOYEE, EMPLOYEE ADDRESS
Any party by written notice to the other party may change the address or the persons to who notices or copies thereof shall be directed. (d) Assignment. This Agreement shall be binding upon and inure to the benefit of the heirs and legal representatives of EMPLOYEE and the permitted assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by EMPLOYEE (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise), if such successor expressly agrees to assume the obligations of the Company hereunder. (e) Governing Law. This Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of STATE NAME, without reference to rules relating to conflicts of law. (f) Dispute Resolution. Any dispute or controversy arising under this Agreement shall be determined and settled by arbitration under the Commercial Arbitration Rules of the American Arbitration Association. Any such arbitration commenced pursuant to this Section 4(f) shall take place in CITY, STATE. The arbitration shall be final and binding and judgment thereon may be entered by any court having competent jurisdiction. EMPLOYEE acknowledges that monetary damages will not be an adequate remedy for the Company in the event of a breach of the covenants contained in Section 2, and that it would be impossible for the Company to measure damages in the event of such a breach. Therefore, EMPLOYEE agrees that, in addition to other rights that the Company may have, EMPLOYEE shall forfeit the right to any payments under this Agreement, and the Company shall be entitled to injunctive relief, in the event of a breach or threatened breach of a covenant contained in this Agreement. Notwithstanding anything to the contrary contained herein, the Company may seek injunctive relief from a court of competent jurisdiction in the event of a breach or threatened breach of a covenant contained in this Agreement. (g) Severability. Each section and subsection of this Agreement constitutes a separate and distinct provision hereof. It is the intent of the parties to this Agreement that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applicable. Accordingly, if any one or more of the terms, covenants or restrictions of this Agreement shall be determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, covenants and restrictions shall remain in full force and effect, and the invalid, void or unenforceable provisions shall be deemed severable. Moreover, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject matter, it shall be reformed by limiting and reducing it to the minimum extent necessary, so as to be enforceable to the extent compatible with the applicable law as it shall then appear. (h) Assistance in Litigation. EMPLOYEE shall cooperate fully with the Company in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of the Company that relate to events or occurrences that transpired while EMPLOYEE was employed by the Company. (i) Waivers. Any waiver by any party of any violation of, breach of or default under any provision of this Agreement by the other party shall not be construed as, or constitute, a continuing waiver of such provision, or waiver of any other violation of, breach of or default under, any other provision of this Agreement. (j) Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as shall be required to be withheld pursuant to any law or government regulation or ruling. (k) Survival of Certain Obligations. The obligations of the Company and EMPLOYEE set forth in this Agreement which by their terms extend beyond or survive the termination of the Term of Employment shall not be affected or diminished in any way by the termination of the Term of Employment. (l) Voluntary Agreement. Each party to this Agreement has read and fully understands the terms and provisions hereof, has had the opportunity to review this Agreement with legal counsel, has executed this Agreement based upon such party’s own judgment and, if desired, advice of counsel, and knowingly, voluntarily and without duress, agrees to all of the terms set forth in this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties and no presumption or burden of proof will arise favoring or disfavoring any party because of authorship of any provision of this Agreement. Except as expressly set forth in this Agreement, neither the parties nor their affiliates, advisors and/or their attorneys have made any representation or warranty, express or implied, at law or in equity with respect of the subject matter contained herein.
EXECUTION PAGE FOLLOWS
The Company has caused this Agreement to be duly executed and delivered by its duly authorized officer, and EMPLOYEE has duly executed and delivered this Agreement, as of the date first written above. COMPANY NAME
Name: Title: EMPLOYEE ________ EMPLOYEE NAME
Duties and Responsibilities
Performance of duties typical of a NAME OF THE POSITION, together with such other duties and responsibilities from time to time assigned to EMPLOYEE, whether orally or in writing, by the President and Chief Executive Officer of the Company.
Incentive Bonus EMPLOYEE will be eligible for additional compensation comprised of an Incentive Bonus. Whether the Incentive Bonus will be paid and the amount of the Incentive Bonus that may be paid is subject to change from time to time based upon the sole discretion and approval of the Board of Directors of the Company. The Incentive Bonus is governed by the Company’s Management Incentive Compensation Plan; in the event of any conflict between this Agreement and the Management Incentive Compensation Plan, the Management Incentive Compensation Plan shall control.
EXHIBIT C Benefits A. EMPLOYEE shall receive the following: 1. Health insurance coverage for EMPLOYEE and his family, if elected and pursuant to all terms and conditions (including eligibility conditions payment of applicable amounts to the Company) of the applicable plan. 2. Three weeks paid vacation.
The Employment Agreement is legal document containing the agreement of both parties for employment. The author is not an attorney and does not purport to offer legal counsel, but only provide a general overview of an employment agreement and a sample for viewing. Therefore, it is strongly recommended that legal counsel be engaged and represent both the Company and Employee during the entirety of negotiation and employment agreement process to ensure all legal rights are protected.
Keith McAslan is a Partner with CxO To Go a national professional services company headquartered in Denver, Colorado that provides on-demand C-Level expertise and best practices to client companies on a part time, flexible, and affordable basis. Keith is sought after to provide advisory services as the Trusted Advisor to Owners and CEO’s. By utilizing his extensive experience as a successful financial and operational C-level executive, Keith brings a results driven leadership style to complex situations.
McAslan’s expertise includes: financial advisory; management consulting; part time, interim & virtual CFO, COO and CEO; debt and equity financing; turnaround management; acquisition and divestiture advisory. Most recently Keith, was instrumental in the successful sale of Western Forge to Ideal Industries. As the interim CFO with finance and private investment transaction experience, he guided the management team through the complex sale and due diligence process completing the sale from prospective buyer presentation to close within 60 days. Please contact Keith at 303-520-2493, [http://www.cxotogo.com], or [email protected] for your free 2 hour strategy call to discuss your business needs.