Amendment and Limited Waiver for Executive Employment Agreement

Summary

This template amendment and waiver can be used to modify an existing executive employment agreement so that a change in the terms of employment will not trigger severance or other rights the executive may otherwise have under the contract. This template includes practical guidance, drafting notes, and alternate clauses. Unforeseen circumstances may warrant a mutually agreed-upon change to the terms of an existing employment agreement between a company and its executives. For example, company leadership may determine that a base salary reduction for upper management is necessary or desirable, at least on a temporary basis, upon encountering cash flow restrictions due to unanticipated economic factors or operational constraints. Another example might be a decision to move the company headquarters with the expectation that executives will relocate far from a workplace explicitly set forth in their employment agreements. The alternate clauses in this template address these two examples. The default language contains generic language with placeholders for specifying the contracts term(s) being amended. Changes to the terms of a binding written or oral employment agreement should be documented to memorialize the new understanding of the parties. Further, the amendment should contain an explicit waiver by the executive of any contractual protections they may otherwise have had under the original agreement if such a disadvantageous change occurs. In the most straightforward case, this involves so-called good reason provisions that, in general, allow the executive to resign upon a triggering event and treat the separation as a constructive termination without cause, which would entitle them to receive severance benefits. Even without a formal good reason clause, modifying the terms of employment set forth in an employment agreement absent the express consent of the executive might give rise to an actionable contract breach. This template amendment and limited waiver assumes that the existing employment agreement has a good reason provision that would be triggered by the contemplated change in terms of employment and that the employment agreement contains the following defined terms: "Base Salary," "Good Reason," and "Compensation Committee." For additional resources relating to executive employment agreements, see the Executive Employment Agreement Resource Kit.