Employment Agreement - Key Employee & Executive

for Your State

Kit designed to assist you in the preparation of an employment agreement for a key employee.

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Some companies may find that certain employees are so integral to that company's continued success, they warrant a special type of employment agreement that offers a particular employee added protections and benefits, while also protecting the company in the event the employee resigns or is otherwise incapacitated. These "key employee? or "key man? employment agreements generally include such additional provisions from standard employment agreements as "for cause? termination provisions, profit sharing provisions, and built in severance terms and benefits.

Included in this Key Employee Employment Agreement is a sample form for an employment agreement for a "key employee,? along with some basic information regarding employment agreements for key personnel.

Among others, this form includes the following provisions:
  • Employment
  • Salary
  • Vacation
  • Additional Benefits (including stock options)
  • Non-competition
  • Expenses
  • Inventions
  • Termination (at-will, for cause explanations and options for severance or no severance plans)
This attorney-prepared packet contains:
  1. Information about the Key Employee Employment Agreement
  2. Employee Non-Compete Agreement
State Law Compliance: This form can be used in your state
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.








FindLegalForms.com
“Key Employee” Employment Agreement  Kit

This kit is designed to assist you in the preparation of an employment agreement for a key employee.

Some companies may find that certain employees are so integral to that companys continued success, they warrant a special type of employment agreement that offers a particular employee added protections and benefits, while also protecting the company in the event the employee resigns or is otherwise incapacitated.  These “key employee” or “key man” employment agreements generally include such additional provisions from standard employment agreements as “for cause” termination provisions, profit sharing provisions, and built in severance terms and benefits.

Included in this kit is a sample form for an employment agreement for a “key employee,” along with some basic information regarding employment agreements for key personnel.  There are a number of italicized instructions included within the sample agreement.  Be sure to delete these italicized instructions prior to printing your agreement; they are there solely to assist you in preparing the document.

NOTE:  This kit is designed to be used as a guide for drafting your own agreement.  You are advised to have a competent employment law attorney review any employment agreement before you sign it or offer it to another party for their signature.



Information
“Key Employee” Employment Agreement


Introduction
The employment agreement serves a number of beneficial purposes.  First, it provides the employee with the basic conditions of his/her employment.  For example, among other things, the employment agreement will state basic duties, salary, and benefits.  Second, the employment agreement protects the employer.  It will clarify the employers expectations for the employee and grounds for termination.  Furthermore, the employment agreement will establish that the employment is “at will,” meaning the employment relationship can be terminated by either the employee or the employer at any time (except for terminations that violate federal or state law).  Although the “at will” doctrine is not recognized in every state, “at will” language will still help clarify the nature of the employment relationship.

In addition to the standard terms and provisions described above, this form also provides additional provisions for higher level employees including an agreement not to compete, an agreement not to solicit employees and an assignment invention.

Most states will enforce this type of agreement.  However, most states will also require that for the agreement to be enforceable the employee must have received “consideration” for signing the document.  This means that the employee must have received some gain from signing the agreement.  Because of this, it is best if the employee signs the employment agreement at the beginning of his/her employment, then it becomes a condition of his/her employment and the gain the employee receives (the job) is obvious.

Employment relationships are governed by both federal and state law.  Many of the state laws differ dramatically (e.g. some states have imposed limitations on non-compete clauses and invention assignment provisions), therefore employers and employees should become familiar with the laws of their specific state and the federal government before entering into an employment arrangement.  Furthermore, before using the form you should always consult with your attorney to ensure that it addresses you specific situation.

This document should not be used with employees that are covered by a collective bargaining agreement or union contract until carefully reviewed by the employers counsel.

Key Personnel Considerations
In many cases, companies will offer terms to employees deemed to be “key employees” that are more attractive than those terms offered to other employees.  For example, a company may offer to limit its ability to terminate that employee, requiring cause for termination.  A company may also offer profit sharing, or a severance package in the event the employee chooses to resign.

A company retaining key personnel will also want to protect itself, however, ensuring that it gets the best efforts of the key employee, and also that it protects itself against the loss of that employees services.  One way that a company may protect itself is to include a broader non-competition provision than it would in an ordinary employment agreement.

Another mechanism a company may employ to protect itself is “key man” insurance.  This type of life/disability insurance protects the company in the event the key employee is incapacitated and unable to render services to the company.  This type of insurance is not generally addressed in an employment agreement, but can be a useful tool in handling relationships with key personnel.  If your company would be severely handicapped by the loss of a key employees services, it may be a good idea to investigate a “key man” insurance policy prior in conjunction with the key employee employment agreement.

At-will Employment/For Cause Termination
While most employees are classified as at-will, there are certain situations (i.e., the key employee situation) in which an employer will offer the employee greater protection against termination.  Generally, this is accomplished through a provision in the prohibits the employer from termination the employee during the term of the employment agreement unless the termination is “for cause.”  The “for cause” standard is frequently difficult to meet, however, and even when met can result in litigation by a terminated employee.  Therefore, it is important to consider carefully whether to offer this type of employment relationship to any employee.

The sample agreement below includes two different termination provisions; one if your employee will be an at-will employee, and one if the employee will be terminable only for cause.  Choose the provision that fits your situation, and be sure to delete the other provision prior to finalizing and printing your agreement.

You are advised to consult with a competent employment law attorney in your state prior to offering any employee an agreement limiting termination to “for cause.


Key Employee Employment Agreement
for
                           


This Employment Agreement (the “Agreement”) is made effective as of         , 20     , by and between                          (the “Employer”) and                          (the “Employee,” and collectively, the “Parties”).

WHEREAS, Employee (currently/desires to) provide(s) services to Employer; and

WHEREAS, Employer wishes to recognize its appreciation of Employees services and to set forth the terms of the employment relationship with Employee in writing;

NOW THEREFORE, in consideration of the mutual promises and covenants set forth below, the Parties agree as follows:

1.  Employment.  Employer shall employ Employee in the position of                   .  Employees duties shall include:                                                                                                                                          and other duties as may be assigned by Employer from time to time.


2.  Salary.  For the services provided, Employer will pay Employee an (annual/monthly/weekly) salary of $____________, paid in accordance with Employers annual payroll procedures.

3.  Vacation.  Employee will accrue (vacation/paid-time-off) at a rate of __________________ hours per month.  Vacation approval will be handled in accordance with the normal practices of Employer.

4.   Additional Benefits.  Employee will also receive the following additional benefits:
(Detail any benefits you intend to offer your key employee.  Add or delete subsections as necessary, making sure to renumber your final draft accordingly prior to printing.)
a.   Health/dental insurance.                                                             .
b.   401k/Retirement plan.                                                             .
c.   Life/Disability insurance.                                                            .
d.   Transportation allowance.                                                           .
e.   Stock options.                                                                .

5.  Expenses.  Employer will reimburse Employee for reasonable expenses incurred by Employee in the performance of his duties.  Reimbursement will be handled in accordance with Employers normal practices and policies.

6.  Conflicting Employment.  Employee agrees that during the term of his/her employment with Employer, he/she will neither undertake nor engage in any other employment opportunities or business ventures unless he/she has received prior written consent from Employer to do so.  This provision shall not prohibit Employee from engaging in civic or non-profit activities, provided that such activities do not materially interfere with Employees job responsibilities with Employer.

7.  Conflicting Interests.  Employee agrees that during the term of his/her employment with Employer, he/she shall not acquire, assume or participate in, directly or indirectly, any position, investment or interest known by him to be adverse or antagonistic to the Employer, its business or prospects, financial or otherwise.  Employee also shall not acquire any financial interest in, or have any business connection with, any company that competes directly with Employers business, throughout the world, in any line of business engaged in (or planned to be engaged in) by Employer.  Nothing in this Section 7 shall prohibit Employee from becoming or remaining a passive investor in any publicly traded corporation, so long as his interest in that corporation does not aggregate to more than 1% of the voting shares of such corporation.
8.  Confidentiality.  Employee acknowledges that he/she may have access to Employers confidential and proprietary information.  Such confidential information may include, without limitation: i) business and financial information, ii) business methods and practices, iii) technologies and technological strategies, iv) marketing strategies and other such information as Employer may designate as confidential (“Confidential Information”).  Employee agrees not to disclose to any other person (unless required by law) or use for personal gain any Confidential Information at any time during or after the termination of employment, unless Employer grants express written consent prior to such a disclosure.  In addition, Employee will use his/her best efforts to prevent any such disclosure.  Confidential information will not include information that is in the public domain, unless such information falls into public domain through Employees unauthorized actions.
9.  Non-competition.  Following the termination of employment, Employee agrees not to engage in any business similar to or in competition with the business of Employer in the geographical area for a period of __________________ (e.g. six months) within a radius of ______________ miles of Employers home address.  For purposes of this agreement, engaging “in any business similar to, or in competition with the business of Employer” shall include, without limitation: (a) engaging in such a business as an owner, partner or agent; (b) taking employment with a third party engaged in such business either as an employee, contractor or consultant; or (c) soliciting customers for the benefit of a third party engaged in such business.

10.  Non-solicitation of employees.  Employee agrees that for a period of ______________ (e.g. six months) following the termination of his/her employment, Employee will not induce, recruit or solicit any of Employers employees to terminate their employment or enter into another employment arrangement with any other party.
11.  Inventions.
a.  Disclosure.  During the course of his/her employment, Employee agrees to promptly give full written disclosure to Employer of all inventions, discoveries, improvements, developments and innovations, conceived in whole or in part by Employee, directly or indirectly that: (i) result from work performed on behalf of Employer, (ii) relate in any manner to Employers business or (iii) result from the use of Employers materials, time, resources, employees or facilities (collectively the “Inventions”).
b.  Assignment/Assistance.  Employee hereby assigns all right, title, and interest to the Inventions to Employer, its successors and assigns.  Furthermore, with respect to the Inventions, during the course of his/her employment and after its termination, Employee agrees to: (i) assist Employer in obtaining copyrights, patents, or any other intellectual rights; (ii) provide all pertinent information and data to Employer, (iii) execute all applications, assignments and other instruments as required by Employer; and (iv) at Employers request and expense, assist in the defense and prosecution of its intellectual rights in the Inventions.
12.  Other Rules and Policies.  Employee agrees to abide by any other rules, policies or procedures as communicated by Employer that are generally applicable to employees of Employer.

(NOTE:  Select only one of the three possible termination provisions set forth below.  Be sure to delete the non-operative provision prior to printing this Agreement.).

13.  Termination.  

a.  This is an “at-will” employment relationship and may be terminated by either Employer or Employee at any time (except for terminations that would be in violation of federal or state law).

b.  If Employee is terminated without cause, he/she shall continue to receive salary payments for __ months from the date of termination, or until Employee begins employment with another party, whichever occurs first.  

c.  If Employee is terminated for cause, Employee will receive no severance payments from Employer.  Termination for cause shall be effected only for the following reasons:

i.  Employee's breach of his duty of undivided loyalty in the execution of his fiduciary duties to Employer, including, but not limited to, the use of his position of trust to further his private interests, or depriving Employer of any opportunity to which it is entitled;

ii.  Dishonesty of Employee with respect to Employer or any of its subsidiaries;

iii.  Willful misfeasance or nonfeasance of duty intended to injure or having the effect of injuring the reputation, business, or business relationship of Employer or of any of its subsidiaries or any of their respective officers, directors or employees;

iv.  Conviction of Employee upon a charge of any crime which involves moral turpitude or which could reflect unfavorably upon Employer or any of its subsidiaries;

v.  Willful or prolonged absence from work by Employee (other than by reason of disability due to physical or mental illness) or failure, neglect or refusal by Employee to perform his duties and responsibilities without the same being corrected upon ten days prior written notice; or

vi.  Material breach by Employee of any of the covenants contained on this Agreement.

or

13.  Termination and Term.
a.  Termination.  Employee may not be terminated by Employer during the term of this Agreement unless such termination is for cause. Termination for cause shall be effected only for the following reasons:

i.  Employee's breach of his duty of undivided loyalty in the execution of his fiduciary duties to Employer, including, but not limited to, the use of his position of trust to further his private interests, or depriving Employer of any opportunity to which it is entitled;

ii.  Dishonesty of Employee with respect to Employer or any of its subsidiaries;

iii.  Willful misfeasance or nonfeasance of duty intended to injure or having the effect of injuring the reputation, business, or business relationship of Employer or of any of its subsidiaries or any of their respective officers, directors or employees;

iv.  Conviction of Employee upon a charge of any crime which involves moral turpitude or which could reflect unfavorably upon Employer or any of its subsidiaries;

v.  Willful or prolonged absence from work by Employee (other than by reason of disability due to physical or mental illness) or failure, neglect or refusal by Employee to perform his duties and responsibilities without the same being corrected upon ten days prior written notice; or

vi.  Material breach by the Employee of any of the covenants contained on this Agreement.

b.  Term.  The term of this agreement (the “Term”) shall be for        (years/months).

or
13.  Termination.   This is an “at-will” employment relationship and may be terminated by either Employer or Employee at any time (except for terminations that would be in violation of federal or state law).

14.  Return of Property.  Upon termination of employment, Employee will return to Employer all drawings, documents, and other tangible manifestations of Confidential Information (and all copies and reproductions thereof).  In addition, Employee will return any other property belonging to Employer including without limitation: computers, office supplies, money and documents.

15.  Continuing Obligations.  Notwithstanding the termination of Employee for any reason, the provisions of paragraph 8, 9, 10 and 11 of this Agreement will continue in full force and effect following such termination.

16.  Binding Effect.  The covenants and conditions contained in the Agreement shall apply to and bind the Parties and the heirs, legal representatives, successors and permitted assigns of the Parties.

17.  Cumulative Rights.  The Parties rights under this Agreement are cumulative, and shall not be construed as exclusive of each other unless otherwise required by law.

18.  Waiver.  The failure of either party to enforce any provisions of this Agreement shall not be deemed a waiver or limitation of that party's right to subsequently enforce and compel strict compliance with every provision of this Agreement.

19.  Severability.  If any part or parts of this Agreement shall be held unenforceable for any reason, the remainder of this Agreement shall continue in full force and effect. If any provision of this Agreement is deemed invalid or unenforceable by any statute, ordinance or court of competent jurisdiction, and if limiting such provision would make the provision valid, then such provision shall be deemed to be construed as so limited.

20.  Counterparts.  This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.

21.  Entire Agreement.  This Agreement constitutes the entire agreement between the Parties and supersedes any prior understanding or representation of any kind preceding the date of this Agreement. There are no other promises, conditions, understandings or other agreements, whether oral or written, relating to the subject matter of this Agreement. This Agreement may be modified in writing and must be signed by both Employee and Employer.

22.  Notice.  Any notice required or otherwise given pursuant to this Agreement shall be in writing and mailed certified return receipt requested, postage prepaid, or delivered by overnight delivery service, addressed as follows:

Employer:   ________________________________
________________________________
________________________________


Employee:    ________________________________
________________________________
________________________________


Either party may change such addresses from time to time by providing notice as set forth above.

23.  Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of _______________________________.



[The remainder of this page intentionally left blank.]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed the day and year first above written.



EMPLOYER:

                  
Signature

                  
Name  Please Print

                  
Title




EMPLOYEE:

                  
Signature

                  
Name  Please Print

Number of Pages10
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#28207

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