EXECUTIVE EMPLOYMENT AGREEMENT
(Pennsylvania)
[// GUIDANCE: This template is drafted for use with executives employed by a Pennsylvania corporation. All bracketed items must be customized. Optional provisions are clearly noted.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Employment; Term
- Duties & Performance Standards
- Compensation & Benefits
- Business Expenses
- Representations & Warranties
- Covenants & Restrictions
- Termination; Severance
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of [Effective Date] (the “Effective Date”) by and between [Company Legal Name], a [Pennsylvania] corporation (the “Company”), and [Executive Name] (“Executive,” and together with the Company, the “Parties,” and each, a “Party”).
WHEREAS, the Company desires to employ Executive in an executive capacity and Executive desires to accept such employment, all on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth herein, and intending to be legally bound, the Parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the relevant Section.
“Affiliate” – Any person or entity controlling, controlled by, or under common control with the Company.
“Base Salary” – The annualized salary specified in Section 5.1, as may be adjusted from time to time.
“Board” – The Board of Directors of the Company.
“Cause” – (a) Executive’s willful misconduct or gross negligence in performance of Executive’s material duties; (b) conviction of, or plea of guilty or nolo contendere to, a felony or crime involving moral turpitude; (c) fraud, embezzlement, or material dishonesty against the Company; (d) material breach of this Agreement or any restrictive covenant, following written notice and a [30]-day cure period (if curable).
“Change in Control” – The consummation of any transaction or series of transactions that results in (i) any person or group acquiring, directly or indirectly, beneficial ownership of >50% of the combined voting power of the Company, (ii) a merger, consolidation, or sale of substantially all assets of the Company, or (iii) the replacement of a majority of the incumbent Board within a 12-month period, excluding replacement approved by the incumbent Board.
“Code Section 409A” – Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
“Good Reason” – Without Executive’s written consent: (a) material reduction in Base Salary or target bonus opportunity; (b) material diminution in Executive’s title, authority, or primary duties; (c) relocation of Executive’s primary work location >[50] miles; or (d) material breach by the Company of this Agreement, in each case following written notice by Executive within [60] days and failure by the Company to cure within [30] days.
“Severance Period” – The period specified in Section 9.4 for which severance benefits are payable.
3. EMPLOYMENT; TERM
3.1 Position. The Company hereby employs Executive as [Title]. Executive shall report to the Board or its designee.
3.2 Term. Executive’s employment shall commence on the Effective Date and shall continue until terminated pursuant to Section 9 (the “Term”).
4. DUTIES & PERFORMANCE STANDARDS
4.1 Duties. Executive shall have such duties, authority, and responsibilities commensurate with the position of [Title] and such other duties as reasonably assigned by the Board, consistent with Executive’s position.
4.2 Time & Effort. Executive shall devote substantially all business time and best efforts to the performance of Executive’s duties and shall comply with Company policies and all applicable laws.
4.3 Fiduciary Duties. Executive acknowledges fiduciary duties of loyalty and care and agrees to act in the best interests of the Company at all times.
5. COMPENSATION & BENEFITS
5.1 Base Salary. Company shall pay Executive a Base Salary of $[—] per annum, payable in accordance with the Company’s normal payroll practices, subject to applicable withholdings.
5.2 Annual Bonus. Executive shall be eligible to receive an annual cash bonus with a target opportunity of [—]% of Base Salary, based on performance criteria established by the Board and payable no later than [March 15] following each fiscal year.
5.3 Long-Term Incentive Awards. Executive shall be eligible to participate in the Company’s equity or long-term incentive plans, subject to Board approval and plan terms.
5.4 Benefits. Executive shall be eligible to participate in all employee benefit plans maintained by the Company for senior executives, subject to plan terms.
5.5 Paid Time Off. Executive shall be entitled to [—] days of paid time off per calendar year, prorated for partial years.
[// GUIDANCE: Confirm PTO policy complies with Pennsylvania Wage Payment & Collection Law regarding payout upon separation.]
6. BUSINESS EXPENSES
The Company shall reimburse Executive for all reasonable and necessary business expenses incurred in the performance of duties hereunder, in accordance with the Company’s expense reimbursement policy and Code Section 409A.
7. REPRESENTATIONS & WARRANTIES
7.1 Executive Representations. Executive represents that Executive (a) is not a party to any agreement that would restrict performance of duties hereunder, (b) will not use any confidential information belonging to a prior employer, and (c) possesses the requisite skill and experience for the position.
7.2 Company Representations. The Company represents that (a) it has full power and authority to enter into this Agreement, and (b) the execution and performance of this Agreement have been duly authorized.
7.3 Survival. The representations and warranties in this Section 7 shall survive termination of this Agreement for a period of [12] months.
8. COVENANTS & RESTRICTIONS
8.1 Confidentiality. Executive shall not disclose or use Confidential Information during or after employment, except as required for the benefit of the Company.
8.2 Return of Property. Upon termination, Executive shall return all Company property and Confidential Information.
8.3 Intellectual Property. All inventions and works of authorship conceived or reduced to practice by Executive during employment that relate to the Company’s business shall be the exclusive property of the Company. Executive shall execute all documents necessary to vest such rights in the Company.
8.4 Non-Competition. During employment and for [12] months thereafter (the “Restriction Period”), Executive shall not, without prior written consent of the Board, engage in any Competitive Activity within [Pennsylvania and any other state in which the Company conducts material operations].
8.5 Non-Solicitation. During employment and for the Restriction Period, Executive shall not (a) solicit or hire any employee or independent contractor of the Company, or (b) solicit any client, customer, or vendor for a Competing Business.
8.6 Reasonableness; Reformation. Executive acknowledges that the restrictions are reasonable and necessary to protect the legitimate interests of the Company. If any restriction is found unenforceable, a court may modify and enforce it to the maximum extent permitted by law.
8.7 Tolling. The Restriction Period shall be tolled for any period during which Executive is in breach of Section 8.4 or 8.5.
9. TERMINATION; SEVERANCE
9.1 Termination Events. Executive’s employment may be terminated at any time (a) by the Company for Cause, (b) by the Company without Cause, (c) by Executive for Good Reason, (d) by Executive without Good Reason upon [60] days’ notice, (e) upon Executive’s death, or (f) upon Disability (defined as inability to perform essential functions for [180] consecutive days).
9.2 Accrued Obligations. Upon any termination, Executive shall receive (a) earned but unpaid Base Salary through the date of termination, (b) unreimbursed expenses, and (c) any vested employee benefits (the “Accrued Obligations”).
9.3 Severance for Termination Without Cause or for Good Reason. Subject to Section 9.6 and Executive’s execution of a standard release of claims:
(a) Cash Severance. Base Salary continuation for the Severance Period of [12–24] months.
(b) Bonus. Pro-rated annual bonus for the year of termination, based on actual performance and paid at the time bonuses are paid to senior executives generally.
(c) COBRA. Company-paid COBRA premiums for the Severance Period or until Executive becomes eligible for comparable coverage.
(d) Equity Acceleration. Vesting acceleration of [—]% of outstanding equity awards.
9.4 Severance Upon Change in Control. If, within [12] months following a Change in Control, Executive is terminated without Cause or resigns for Good Reason, the Severance Period shall equal [24–36] months, and all unvested equity shall immediately vest in full.
9.5 No Severance for Cause or Voluntary Resignation. Executive shall not be entitled to severance benefits if terminated for Cause or if Executive resigns without Good Reason.
9.6 Conditions. (a) Executive must deliver an effective release of claims within [45] days following termination; (b) Executive must comply with the covenants in Section 8; (c) payments shall commence on the first payroll date following expiration of any revocation period for the release, subject to Code Section 409A.
10. RISK ALLOCATION
10.1 Indemnification. To the fullest extent permitted by Pennsylvania law and the Company’s bylaws, the Company shall indemnify, defend, and hold harmless Executive from and against any and all claims, liabilities, losses, damages, or expenses, including reasonable attorneys’ fees, arising out of Executive’s service as an officer, except to the extent resulting from Executive’s gross negligence, willful misconduct, or fraud.
10.2 D&O Insurance. The Company shall maintain directors’ and officers’ liability insurance covering Executive on terms no less favorable than those applicable to any other senior executive.
10.3 Limitation of Liability. [PLACEHOLDER: Insert negotiated aggregate cap on direct damages, excluding indemnities for third-party claims, breaches of confidentiality, and obligations under Section 8.]
10.4 Force Majeure. Neither Party shall be liable for failure to perform due to events beyond its reasonable control, provided the affected Party gives prompt notice and uses diligent efforts to resume performance.
11. DISPUTE RESOLUTION
11.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to conflict-of-laws principles.
11.2 Forum Selection. Subject to Section 11.3, any action arising out of or relating to this Agreement shall be brought exclusively in the state courts located in [County, Pennsylvania], and the Parties hereby irrevocably submit to such jurisdiction.
11.3 Arbitration. Except for (a) claims for injunctive or equitable relief, and (b) enforcement of the arbitration award, any dispute arising out of or relating to this Agreement shall be finally settled by binding arbitration administered by the American Arbitration Association under its Employment Arbitration Rules. The arbitration shall be conducted in [City, Pennsylvania] before a single arbitrator. Judgment on the award may be entered in any court of competent jurisdiction.
11.4 Jury Trial Waiver. [OPTIONAL: TO BE INCLUDED IF ELECTED] EACH PARTY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT.
11.5 Injunctive Relief. The Parties agree that any breach of Section 8 would cause irreparable harm for which monetary damages would be inadequate, and the Company shall be entitled to injunctive relief in any court of competent jurisdiction, without the need to post bond.
11.6 Attorneys’ Fees. The prevailing Party in any action to enforce this Agreement shall be entitled to recover reasonable attorneys’ fees and costs.
12. GENERAL PROVISIONS
12.1 Amendment; Waiver. This Agreement may be amended only by a writing signed by both Parties. No waiver shall be effective unless in writing and signed by the Party waiving.
12.2 Assignment. This Agreement is personal to Executive and may not be assigned by Executive. The Company may assign this Agreement to any successor in interest; provided that such successor assumes all obligations hereunder.
12.3 Successors & Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, successors, and permitted assigns.
12.4 Severability. If any provision is held invalid or unenforceable, such provision shall be reformed to the minimum extent necessary, and the remainder shall remain in full force and effect.
12.5 Entire Agreement. This Agreement (including any equity award agreements and Company policies referenced herein) constitutes the entire agreement between the Parties and supersedes all prior understandings with respect to employment of Executive.
12.6 Counterparts; Electronic Signature. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. Signatures transmitted electronically shall be deemed original signatures for all purposes.
12.7 Construction. Headings are for convenience only and shall not affect interpretation. “Including” means “including without limitation.”
12.8 409A Compliance. The Parties intend that all payments hereunder comply with or be exempt from Code Section 409A. Notwithstanding any provision to the contrary, if Executive is a “specified employee” (as defined in Code Section 409A) at termination, any non-exempt deferred compensation payable within six months following termination shall be delayed until the first payroll date after the six-month anniversary of termination.
13. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Executive Employment Agreement as of the Effective Date.
| COMPANY | EXECUTIVE |
|---|---|
| [Company Legal Name] | [Executive Name] |
| By: _________ | ________ |
| Name: _______ | |
| Title: ______ | |
| Date: _______ | Date: ________ |
[// GUIDANCE: Confirm corporate authority via board resolution. Notarization is not generally required for employment agreements under Pennsylvania law, but parties may add notarization blocks if desired.]
END OF AGREEMENT