| An Executive Employment Agreement is a binding | | | | should promise to undertake the responsibilities for |
| agreement for employment between a company and | | | | and devote his productive time, abilities, and attention |
| an executive. In exchange for valuable consideration | | | | to the business of the employer during the term of |
| given by the company, the executive is agreeing to | | | | the Agreement, as well as comply with all federal, |
| perform certain services. In contrast to an Executive | | | | state, and local laws. |
| Compensation Agreement, Executive Employment | | | | 4. Duties of Employer. The employer should promise |
| Agreements are binding, and by executing the | | | | to pay all compensation, benefits, and allowances as |
| agreement, both the company and the executive are | | | | set forth in the agreement. The employer should also |
| promising to perform under the agreement's terms. | | | | agree to provide offices, and if agreed upon, |
| Executive Employment Agreements should begin with | | | | "stenographic help" (a secretary) as appropriate. |
| a "Recitals" section that lays out the overall purpose | | | | 5. Confidential Information. The employee must agree |
| of the agreement. Each recital begins with | | | | to keep confidential information confidential and to |
| "WHEREAS." Generally, the first recital should state | | | | refrain from disclosing confidential information to any |
| simply that the "Employer's Board of Directors | | | | third party during the term of his employment and |
| desires to employ Employee in an executive capacity | | | | for a period of time following his employment, which |
| and Employee desires to be so employed in that | | | | could be anywhere from one to three years or |
| capacity." After any other applicable recitals, the | | | | longer. |
| agreement should say "THEREFORE, in consideration | | | | 6. Non-Competition. The company should require the |
| of the mutual covenants and conditions set forth | | | | executive to promise not to work, directly or |
| below, the parties agree as follows." | | | | indirectly, as an owner, partner, manager, officer, |
| The following are key provisions commonly found in | | | | employee, or consultant for any business that |
| Executive Employment Agreements: | | | | competes with the employer during the term of the |
| 1. Term. The length of the term of the agreement | | | | agreement and for a certain period of time |
| and the termination date should be provided. Also, | | | | afterwards. |
| any understanding regarding the option to renew the | | | | 7. Termination. The agreement should spell out |
| agreement, either on the executive's side, the | | | | whether or not the employee can be terminated only |
| company's side, or both, should be addressed. Most | | | | for cause, or for any reason at all. If only for cause, |
| likely, the contract will be renewable or extendable | | | | then cause must be defined. One possible definition |
| under the same terms expressed in the agreement | | | | for cause would be: (a) any breach of any material |
| upon mutual agreement of the parties. | | | | obligations owed to employer; (b) failure to follow a |
| 2. Compensation and Benefits. First, this provision | | | | directive of the company's Board of Directors; or (c) |
| should list the employee's annual salary. Next potential | | | | conviction of a felony or any act involving moral |
| salary adjustments, either increases or decreases, | | | | turpitude. The severance pay that will be owed to |
| should be laid out. The executive may be able to | | | | executive upon termination either for cause or |
| negotiate for an automatic salary increase if a certain | | | | without cause should be provided. |
| event occurs, such as a merger, sale of the | | | | These are the most important provisions of an |
| company, or accomplishment of certain goals. The | | | | Executive Employment Agreement. General provisions |
| employee's benefits package must also be described, | | | | covering consequences of breach, assignment, |
| including any stock options, health insurance, expense | | | | modification, governing law, and severability should |
| accounts, and vacation time. | | | | round out the agreement. For more information or to |
| 3. Duties of Employee. The employee's position should | | | | download part or all of actual Executive Employment |
| be listed again, and his expected duties should be | | | | Agreements, please visit the Agreement section of |
| described in detail. If the precise services of the | | | | the Real Deal Docs website and conduct a search |
| executive may be extended or curtailed by mutual | | | | accordingly. |
| agreement, this should be listed as well. Executive | | | | |