Severance Agreement Template

SEVERANCE AGREEMENT

 

This Severance Agreement (the “Agreement”) is made on this ____ day of __________, 20__, between [Employer] with its principal place of business located at [Employer Place of Business] (the "Employer") and [Employee Name], located at [Employee Place of Residence] (the "Employee"), (sometimes collectively referred to as the "Parties").

In consideration of covenants and agreements contained herein, the parties hereto agree to the following terms and conditions.

1. Severance

In exchange for the release and covenant not to sue set forth below, the Employer will pay Employee the Severance Benefit, subject to the terms and conditions of this Agreement.

2. Compensation Upon Termination

(a) Termination Without Cause; With Good Reason. If the Employee's employment is terminated by the Employer Without Cause or by the Employee With Good Reason during the Employment Period, the Employer shall provide to the Employee the Accrued Obligations, Severance Compensation, and Other Benefits.

(b) Termination for Cause; Without Good Reason. If the Employee's employment is terminated by the Employer For Cause or by the Employee Without Good Reason during the Employment Period, the Employer shall provide to the Employee the Accrued Obligations, and shall have no other severance obligations under this agreement.

(c) Accrued Obligations.

(1) Definition of Accrued Obligations. "Accrued Obligations" shall mean the sum of the following unpaid benefits as of the Date of Termination:

• payment of any earned but unpaid portion of Employee's annual base salary as in effect from time to time ("Base Salary") through the effective date of such termination;

• reimbursement for any reasonable, unreimbursed and documented business expense he has incurred in performing Employee's duties hereunder;

• the right to elect continuation coverage of insurance benefits to the extent required by law; and

• 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 Employee benefit plan or program of Employer.

(2) Payment of Accrued Obligations.

All Accrued Obligations shall be paid to the Employee in a lump sum in cash within [Payment Made in Number of Days] days of the Payment Date [or Date of Termination].

(d) Severance Compensation.

The Employer shall pay Employee a total of [Severance Amount] (i.e. 2 Months) severance (total amount equaling $Severance Amount in Dollars) ('Severance Compensation').

[Provided Employee is in compliance with all Covenants,] The Severance Compensation [less applicable deductions and withholdings] shall be, payable in accordance with Employer’s regular pay period.

(e) Other Benefits. "Other Benefits" shall mean, as of the Date of Termination:

(1) Equity Awards

Employee'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 Employee continued to serve as an Employee of the Employer during such Severance Period;

"Equity Awards” shall consist of (a) shares of the capital stock of the Employer (“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.

(2) Welfare Benefit Plans

If the Employee elects to continue health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (”COBRA”), the Employer shall pay the [employer] portion of the monthly premium under COBRA for the Employee and, if applicable, the Employee'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.

3. Representations and Warranties.

The Employer and the Contractor respectively represents and warrants to each other that each respectively is fully authorized and empowered to enter into the Agreement and that their entering into the Agreement and [to each parties' knowledge] the performance of their respective obligations under the Agreement will not violate any agreement between the Employer or the Contractor respectively and any other person, firm or organization or any law or governmental regulation.

4. Confidentiality

(a) Obligation. The Employee 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 Employer, and all information and materials received by Employer from third parties (including but not limited to affiliates, subsidiaries, chapters, and members of Employer), 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.

5. Intellectual Property

(a) Ownership. Employee agrees that all copyrights, trademarks, patents, and other intellectual property rights to works or marks arising in from or in connection with the Employee’s employment by Employer 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 Employer.

(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, Employee with effect from creation of any and all work product, hereby assigns, and agrees to assign, to Employer 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.

(c) Moral Rights. Employee 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.

(d) Assistance. Employee further agrees to provide all assistance reasonably requested by Employer, both during and subsequent to the Term of this Agreement, in the establishment, preservation and enforcement of Employer's rights in the work product.

(e) Return of Property. Upon the termination of this Agreement, Employee agrees to deliver promptly to Employer all printed, electronic, audio-visual, and other tangible manifestations of work product, including all originals and copies thereof.

6. 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, Employee shall not, directly or indirectly, without the prior written consent Employer, 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. Employee 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.

7. Non-Solicitation

During the term of this Agreement and for [Non-Solicitation Period] after any termination of this Agreement, Contractor will not, without the prior written consent of the Employer, 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 Employer [or any customer of the Employer].

8. Non-Disparagement

(a) Employee Obligation. Employee will not at any time, during or after the Term, disparage, defame or denigrate the reputation, character, image, products or services of the Employer, or of any of its Affiliates, or, any of its or its Affiliate s directors, officers, stockholders, members, employees or agents.

(b) Employer Obligation. The Employer will not, except as may be required by law, issue any official press release or statement which is intended to disparage Employee.

9. Acknowledgement

Employee 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 Employer.

10. 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.

(i) Choice of Law.The parties agree that this Agreement shall be governed by and enforced in accordance with the laws of the State of [Governing Law State] and all disputes regarding this Agreement shall be brought in the State of [Governing Law State].

IN WITNESS WHEREOF, the Employer and the Employee have each executed and delivered this Agreement as of the Effective Date.

 

____________________________                                    ____________________________

Employer Name                                                                  Employee Name

 

____________________________                                    ____________________________

Employer Signature                                                            Employee Signature