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Employment Agreement - Chief Executive Officer


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Introduction
Description
Use
Table of Contents

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Introduction

A CEO is responsible for managing and coordinating all the activities of a business; as such, the CEO essentially controls the destiny of the business. Therefore, given the importance of the CEO's role, the legal relationship between the CEO and the corporation should not be disregarded. The improper management of such a crucial position can have huge consequences, such as the possible bankruptcy of the business.

Accordingly, best management practice requires the establishment of a solid framework governing the position of a CEO.

Description

This employment agreement is the legal instrument by which a corporation hires a Chief Executive Officer (CEO), to whom it entrusts the task of monitoring all the activities of the corporation. This instrument is used to establish the respective obligations of the parties and to govern their relationship.

Use

In Canada, there are no legal provisions requiring an employer and an employee to sign a formal contract of employment. A simple verbal agreement is sufficient to establish the contractual relationship of employment, which will be subject to the applicable law. But a verbal agreement does not provide an adequate, custom-made legal framework to meet the specific needs of the parties.

For example, consider the issue of delegating authority to the managers of a corporation. Under the applicable law of Quebec and Canada, the absence of a written contract setting out limits of such delegation may be problematic for a corporation whose leaders have too much freedom in exercising their executive powers.

The two following types of instruments can be used to evidence an employment relationship: an employment letter or an employment agreement. An employment letter is limited to stating the general conditions of employment without giving details, whereas an employment agreement provides greater detail regarding the employer-employee relationship. Given the important role that a CEO is expected to play in the corporation, it is important not to leave anything to chance when establishing the contractual relationship. Although contractors may use our employment letter template(document C03.250 in Business Precedents), it is definitely preferable to use the employment agreement since it is broader in scope and therefore better covers numerous contingencies.

Furthermore, it should be kept in mind that a contract is primarily a negotiating tool and that its contents may vary depending on what is agreed between the parties. This contract provides the most fundamental aspects of this type of employment relationship and can therefore be used to structure negotiations with a potential candidate and to help draft the employment agreement with the chief executive officer.

It should be noted that the legal content of this instrument has been drafted according to the laws of the province of Quebec, Canada. Any proposed use of this document for a jurisdiction other than the province of Quebec requires validation of its content by an attorney practicing in that jurisdiction.

Table of Contents

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Admissible Expenses
0.01.03 Agreement
0.01.04 Best Effort
0.01.05 Board of Directors
0.01.06 Budget
0.01.07 Change in Control
0.01.08 Client
0.01.09 Code of Conduct
0.01.10 Confidential Information
0.01.11 Entire Term
0.01.12 Fiscal Year
0.01.13 Force Majeure
0.01.14 Intellectual Property
0.01.15 Law
0.01.16 Legal Representatives
0.01.17 PARTY
0.01.18 Person
0.01.19 Prime Rate
0.01.20 Related Person
0.01.21 Suppliers
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 References within Agreement
0.04.03 Gender and Number
0.04.04 Headings
0.04.05 Presumptions
0.04.06 Knowledge
0.04.07 Approval
0.04.08 GAAP
1.00 PURPOSE
1.01 Employment
1.02 Responsibilities
1.03 Authority
1.03.01 General Powers
1.03.02 Accountability
1.04 Workplace
2.00 COMPENSATION AND BENEFITS
2.01 Signing Bonus
2.02 Base Salary
2.02.01 Initial
2.02.02 Adjustment
2.03 Performance Bonus
2.04 Option
2.04.01 Grant
2.04.02 Duration
2.04.03 Exercise
2.05 Vacation
2.06 Vehicle
2.07 Insurance
2.07.01 Disability
2.07.02 Liability
2.07.03 Collective or Group
2.08 Pension Plan
2.09 Acknowledgement
3.00 TERMS OF PAYMENT
3.01 Signing Bonus
3.02 Base Salary
3.03 Performance Bonus
3.04 Interest
4.00 SECURITY
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
6.00 REPRESENTATIONS AND WARRANTIES OF EMPLOYER
6.01 Status
6.02 Authority
6.03 Binding Agreement
7.00 REPRESENTATIONS AND WARRANTIES OF CEO
7.01 Canadian Resident
7.02 Information
7.03 Health
8.00 MUTUAL DUTIES AND OBLIGATIONS
9.00 DUTIES AND OBLIGATIONS OF EMPLOYER
9.01 Resources
9.02 Equipment
9.02.01 Laptop Computer
9.02.02 Mobile Communication Device
9.03 Expenses
9.04 Indemnification
9.05 Training
9.06 Relocation
9.07 Personal Information and Privacy
9.08 Termination of Employment
9.08.01 Balance
9.08.02 Career Transition Assistance
10.00 DUTIES AND OBLIGATIONS OF CEO
10.01 Availability/Exclusivity
10.02 Support
10.03 Conduct
10.04 Confidential Information
10.04.01 Acknowledgement
10.04.02 Return of Documentation
10.05 Non-competition
10.05.01 Scope
10.05.02 Penalty
10.06 Non-solicitation of Clients
10.06.01 Scope
10.06.02 Penalty
10.07 Non-solicitation of Staff
10.07.01 Scope
10.07.02 Penalty
10.08 Business Opportunities
10.09 Conflict of Interest
10.10 Intellectual Property
10.10.01 Disclosure
10.10.02 Assignment
10.10.03 Waiver
10.10.04 Cooperation
10.10.05 Execution
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.02 Other Remedies
11.02.01 Choices
11.02.02 No Limitations
11.03 Prescription
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
12.03 Election
12.04 Counterparts
12.05 Amendment
12.06 Waiver of Rights
12.07 Electronic Transmission
12.08 Language
13.00 TERMINATION
13.01 Mutual Consent
13.02 By EMPLOYER
13.03 By CEO
13.04 Termination of Employment
13.04.01 Departure
13.04.02 Reimbursement of Advances
14.00 EFFECTIVE DATE
15.00 DURATION
15.01 Probationary or Trial Period
15.02 Initial Term
15.03 Renewal
15.04 Indeterminate
15.05 Survival
15.06 Non Renewal
16.00 SCOPE


SCHEDULE A – EXCERPT FROM A RESOLUTION OF EMPLOYER
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