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Consideration; Mechanics
of Exchange
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Compensation
Severance
Termination Benefits
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2. Severance Benefits
[Drafting Note:
Select Severance or Termination Benefits]
Severance Benefit. In exchange for the release and covenant not to
sue set forth below, the Company will pay Executive the equivalent of [ ]
weeks’ salary, or $[ ], less all required withholdings. The severance will be
paid in a lump sum within ten days following expiration of the seven-day
period set forth below in the Revocation provision.
OR (same language as employment
agreement)
2. Compensation Upon Termination
(a) Termination Without Cause; With
Good Reason. If the Executive's employment is terminated by the
Company Without Cause or by the Executive With Good Reason during the
Employment Period, the Company shall provide to the Executive the Accrued
Obligations, Severance Compensation, and Other Benefits.
(b) Termination Upon Death,
Disability or Retirement. If Executive's employment is terminated by
reason of Executive’s death, Disability or Retirement, the Company shall pay
to the Executive (or the Executive’s estate or beneficiaries) the Accrued
Obligations and Other Benefits.
(i) In the event
of Termination due to Death, the Executive shall also be entitled to any
pension survivor benefits that may become due pursuant to any Executive
benefit plan or program of Company.
(ii) In the event of Termination due to Disability, the Executive shall also
be entitled to payment of [a lump-sum] disability benefit pursuant to any
Executive disability plan or program of Company.
(c) Termination for Cause; Without
Good Reason. If the Executive's employment is terminated by the
Company For Cause or by the Executive Without Good Reason during the
Employment Period, the Company shall provide to the Executive the Accrued
Obligations, and shall have no other severance obligations under this
agreement.
(d) Accrued Obligations.
(i) Definition
of Accrued Obligations. "Accrued Obligations" shall mean
the sum of the following unpaid benefits as of the Date of Termination:
(A) payment of any
earned but unpaid portion of Executive's annual base salary as in effect from
time to time ("Base Salary") through the effective date of such
termination;
(B) reimbursement
for any reasonable, unreimbursed and documented business expense he has
incurred in performing Executive's duties hereunder;
(C) the right to
elect continuation coverage of insurance benefits to the extent required by
law; and
(D) payment of any
accrued but unpaid benefits (including without limitation, any bonus due by
virtue of having met all applicable performance targets prior to the
effective date of such termination), and any other rights, as required by the
terms of any Executive benefit plan or program of Company.
[For the purpose
of this definition, except as provided in the applicable plan, program or
policy, amounts shall be deemed to accrue ratably over the period during
which they are earned, but no discretionary compensation shall be deemed
earned or accrued until it is specifically approved by the Board in
accordance with the applicable plan, program or policy.]
(ii) Payment
of Accrued Obligations. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within [NUMBER OF DAYS] days of the
[Effective Date of this Agreement][or Date of Termination].
(e) Severance Compensation.
(i) Definition
of Severance Compensation. "Severance Compensation" shall
mean an amount equal to [MULTIPLIER NUMBER] times the sum of:
(A) the
Executive's then-current annual base salary, plus
(B) the [average of the sum of the][highest] bonus amounts earned by the
Executive during the Employment Period.
OR
The Company shall pay Employee a total of [NUMBER] [DAYS; MONTHS; YEARS]
severance (total amount equaling $[X]) ('Severance Compensation').
(ii) Payment
of Severance Compensation. The Severance Payment [less applicable
deductions and withholdings] shall be paid in a lump sum within[NUMBER OF
DAYS] business days following the [Effective Date of this Agreement][or Date
of Termination].
OR
[Provided Executive is in compliance with all Covenants,] The
Severance Compensation [less applicable deductions and withholdings]
shall be, payable in accordance with Company’s regular pay period.
(f) Other Benefits.
"Other Benefits" shall mean, as of the Date of Termination:
(i) Equity
Awards.
All equity awards
held by the Executive shall become fully and unconditionally vested, fully
exercisable and fully transferable (except for transfer restrictions imposed
by law).
OR
Executive's rights to vesting of any outstanding stock options, restricted
stock awards and other equity incentive awards ("Equity-Based
Awards") and rights to exercise any outstanding Equity-Based Awards,
shall continue throughout the Severance Period in the same manner as if the
Executive continued to serve as an Executive of the Company during such
Severance Period;
"Equity
Awards” shall consist of (a) shares of the capital stock of the Company
(“Stock”), (b) options and other rights to purchase shares of Stock, (c)
stock units, performance units or phantom shares whose value is measured by
the value of shares of Stock and (d) stock appreciation rights whose value is
measured by increases in the value of shares of Stock.
(ii) Welfare
Benefit Plans.
If the Executive
elects to continue health insurance coverage under the Consolidated Omnibus
Budget Reconciliation Act (‚”COBRA”), the Company shall pay [the entire]
[the employer portion of the] monthly premium under COBRA for the
Executive and, if applicable, the Executive's dependents until the earliest
of:
(A) the close of
the Continuation Period,
(B) the expiration
of the Employee’s continuation coverage under COBRA or
(C) the date when
the Employee receives substantially equivalent health insurance coverage in
connection with new employment or self-employment.
OR
The Company shall continue coverage for Executive (and, if applicable under
the applicable welfare benefit plan(s), his spouse and family) under
Executive benefit plans (such as medical, dental, disability and life) that
covered him (or them) immediately before Executive's termination as if he had
remained in employment until the end of the Severance Period. [If
Executive's participation in any plan is barred, the Company shall either
arrange to provide Executive (his spouse and family, if applicable)
substantially similar benefits or pay Executive the equivalent tax affected
value of the substantially similar benefits in cash, provided such cash
payment(s) are made in the tax years such that the payments are compliant
with the payment rules under Code section 409A.]
[DRAFTING NOTE: consider
other benefits provided under any employment agreement, such as office, car,
or club membership]
[(g) Nature of Payments.
Any amounts due under this Section are in the nature of severance payments
considered to be reasonable by the Company and are not in the nature of a
penalty.]
[(h) Release. The
Executive be not entitled to receive any amounts, rights or benefits under
the Severance Compensation or Other Benefits unless the Executive executes a
release of claims against the Company in form and substance as set forth in
[the attached Release Form].]
[(i) Payments Terminated.
If the Board of Company has determined in good faith that the Executive has
failed to comply with the requirements of the Confidentiality,
Non-Solicitation and Non-Competition provisions at any time following any
termination, then Company shall have no further obligation to pay any amounts
or provide any benefits under this Agreement.]
[(j) No Obligation to Mitigate.
Executive shall not be required to mitigate the amount of any payment
provided for in this Section 2 by seeking other employment or otherwise and
no such payment or benefit shall be eliminated, offset or reduced by the
amount of any compensation provided to the Executive in any subsequent
employment.]
[(k) Withholding and Taxes.
The Company may deduct or withhold from any amounts owing from the Company to
Executive all federal, state and local income, employment or other taxes as
may be required to be withheld by any applicable law or regulation.]
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Covenants
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Restrictions on Conduct of Contractor
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4. Release, Waiver and Covenant Not to
Sue
(a) Release and
Waiver. Executive hereby releases and waives all claims and causes
of action of any kind that he has, known and unknown, against Company,
including its owners, officers, directors, parents, subsidiaries, employees,
affiliates, agents, attorneys, joint ventures, successors and/or assigns
(Company together with these individuals and entities are referred to as the
“Released Parties”). This release and waiver includes all claims and causes
of action that he has under any federal, state or local law, including Title
VII of the Civil Rights Act, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Employee Retirement Income Security Act
and the state law equivalents of any of these statutes. It also includes any
common law claims, including contract and tort claims.
[The Parties agree that to the extent, if any, Executive
may have a right to file or participate in a claim or charge against the
Company, which cannot be waived, the Agreement shall not be intended to waive
such a right. However, even if Executive has a right to file or
participate in a claim or charge against the Company, the
Executive agrees that the Executive shall not obtain, and
hereby waives any right to, relief (legal, equitable, or other) from such a
claim or charge.]
(b) Covenant Not to Sue. Executive
covenants not to initiate a lawsuit or administrative complaint or charge or
commence any sort of action or proceeding whatsoever against the
Released Parties at any time in the future based on any right or claim
that arose on or before the Effective Date of this Agreement.
4. Release, Waiver and Covenant Not to
Sue (a) Release and Waiver. Executive hereby
releases and waives all claims and causes of action of any kind that he has,
known and unknown, against Company, including its owners, officers, directors,
parents, subsidiaries, employees, affiliates, agents, attorneys, joint ventures,
successors and/or assigns (Company together with these individuals and entities
are referred to as the “Released Parties”). This release and waiver includes all
claims and causes of action that he has under any federal, state or local law,
including Title VII of the Civil Rights Act, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, the Employee Retirement Income
Security Act and the state law equivalents of any of these statutes. It also
includes any common law claims, including contract and tort claims. [The
Parties agree that to the extent, if any, Executive may have a right to file or
participate in a claim or charge against the Company, which cannot be waived,
the Agreement shall not be intended to waive such a right. However, even
if Executive has a right to file or participate in a claim or charge against the
Company, the Executive agrees that the Executive shall not obtain, and hereby
waives any right to, relief (legal, equitable, or other) from such a claim or
charge.] (b) Covenant Not to Sue. Executive covenants not
to initiate a lawsuit or administrative complaint or charge or commence any sort
of action or proceeding whatsoever against the Released Parties at any time in
the future based on any right or claim that arose on or before the Effective
Date of this Agreement. 5. Confidentiality
(a) Obligation. The
Executive agrees to maintain the strict confidentiality of all Confidential
Information during the term of this Agreement and [for a period of
CONFIDENTIALITY PERIOD] thereafter.
(b) Scope. For purposes of
this Agreement, "Confidential Information" shall mean all
information and materials of Company, and all information and materials
received by Company from third parties (including but not limited to
affiliates, subsidiaries, chapters, and members of Company), which are not
generally publicly available and all other information and materials which
are of a proprietary or confidential nature, even if they are not marked as
such.
(c) Survival. This
provision shall survive the termination of this Agreement indefinitely.
6. Intellectual Property
(a) Ownership. Executive
agrees that all copyrights, trademarks, patents, and other intellectual
property rights to works or marks arising in from or in connection with the
Executive's employment by Company are "work made for hire" within
the definition of Section 101 of the Copyright Act (17 U.S.C. 101) and shall
remain the sole and exclusive property of Company.
(b) Assignment of Interest.
To the extent any work product is not deemed to be a work made for hire
within the definition of the Copyright Act, Executive with effect from
creation of any and all work product, hereby assigns, and agrees to assign,
to Company all right, title and interest in and to such work product,
including but not limited to copyright, all rights subsumed thereunder, and
all other intellectual property rights, including all extensions and renewals
thereof.
(d) Moral Rights.
Executive also agrees to waive any and all moral rights relating to the work
product, including but not limited to, any and all rights of identification
of authorship and any and all rights of approval, restriction or limitation
on use, and subsequent modifications.
(e) Assistance. Executive
further agrees to provide all assistance reasonably requested by Company,
both during and subsequent to the Term of this Agreement, in the
establishment, preservation and enforcement of Company's rights in the work
product.
(f) Return of Property.
Upon the termination of this Agreement, Executive agrees to deliver promptly
to Company all printed, electronic, audio-visual, and other tangible
manifestations of work product, including all originals and copies thereof.
7. Non-Competition
(a) Restrictions. During
the term of this Agreement and for a period of [NON COMPETITION PERIOD]
immediately following the termination of this Agreement, Executive shall not,
directly or indirectly, without the prior written consent Company, own,
manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as an
officer, director, employee, partner, principal, agent, representative, or
consultant of any Entity engaged in the Restricted Business.
(b) Exceptions. Executive
shall not be deemed to be in contravention of the foregoing if Employee
participates as a passive investor holding up to 1% of the equity securities
of an Entity engaged in the Restricted Business, which securities are
publicly traded.
8. Non-Solicitation.
During the term of this Agreement and for
[NON-SOLITICATION PERIOD] after any termination of this Agreement, Contractor
will not, without the prior written consent of the Company, either directly
or indirectly[, on Contractor 's own behalf or in the service or on behalf of
others], solicit or attempt to solicit, divert or hire away any person
employed by the Company[ or any customer of the Company].
9. Non-Disparagement
(a) Executive Obligation.
Executive will not at any time, during or after the Term, disparage, defame
or denigrate the reputation, character, image, products or services of the
Company, or of any of its Affiliates, or, any of its or its Affiliate s
directors, officers, stockholders, members, employees or agents.
(b) Company Obligation.
The Company will not, except as may be required by law, issue any official
press release or statement which is intended to disparage Executive.
10. Acknowledgement.
Executive [expressly] acknowledges that the covenants of this Agreement are
supported by good and adequate consideration, and that such covenants are
reasonable and necessary [in terms of duration, scope and geographic area] to
protect the legitimate business interests of Company.
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General Provisions
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Notices (92%)
Severability (86%)
Governing Law (84%)
Entire Agreement (78%)
Waiver (72%)
Assignment (66%)
Arbitration and Dispute
Resolution (53%)
Counterparts (52%)
Headings (50%)
Taxes and
Withholding (46%)
Mitigation (42%)
Survival (41%)
Amendment (35%)
Attorneys Fees (33%)
Successors (32%)
Injunctive Relief (32%)
Remedies (29%)
Binding Agreement (23%)
Section 409A of the
Code (22%)
Conflicting
Agreements (16%)
Construction (14%)
Enforcement (13%)
Venue (12%)
More clauses…
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11. General Provisions
(a) Entire Agreement. This Agreement constitutes the entire agreement between the
parties, and supersedes all prior agreements, representations and understandings
of the parties, written or oral.
(b) Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same agreement.
(c) Amendment. This Agreement may be amended only by written agreement of the
parties.
(d) Notices. All notices permitted or required under this Agreement shall
be in writing and shall be delivered in person or mailed by first class,
registered or certified mail, postage prepaid, to the address of the party
specified in this Agreement or such other address as either party may specify
in writing. Such notice shall be deemed to have been given upon receipt.
(e) Assignment. This Agreement shall not be assigned by either party without the
consent of the other party.
(f) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of [GOVERNING LAW STATE], without regard to its
conflict of laws rules.
(g) No Waiver
of Rights. A failure or delay in exercising any right, power or privilege
in respect of this Agreement will not be presumed to operate as a waiver, and
a single or partial exercise of any right, power or privilege will not be
presumed to preclude any subsequent or further exercise, of that right, power
or privilege or the exercise of any other right, power or privilege.
(h)
Severability. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force
and effect.
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