Follow-up response on Agreement review –XXX



Risks/concerns with the Agreement


These are the potential risks that I have identified (there may be others – I don’t have a legal background). I have included clarification questions for you to clarify whether these are actual risks and the changes that I should suggest to my employer to mitigate my risks. If you identify other legal risks or red flags, please mention them.


Clarification questions are highlighted in bold and my high-priority concerns are highlight in yellow.


  1. The “Settlement Date” appears to be indefinite. Clauses 5(a) and 4(b) taken together mean that “Settlement Date” could be an unspecified period of time after the end of the “Performance Period”, XXX
  2. Related to #1 above, continued employment is required up to the “Settlement Date” rather than at the end of the “Performance Period”. This means that I would have to remain an employee for an undefined period of time before after the Performance Period before receiving the award. Any recommendations on this?
  3. Restrictive Covenant K (“Recovery of Expenses”). This clause could result in me facing unlimited legal liabilities in New York courts. Is this standard? Any suggestions on this covenant? (This is surely a major risk?)
  4. The agreement does not include a termination clause. Should I have the right to terminate the agreement? (For example, if there is no pay-out, then the Agreement and its covenants should no apply.)
  5. Restricted Covenant E (“Non-Disparagement”). Is this a standard clause? Specifically, inclusion of the word “perpetuity” in the first sentence (“While engaged by the Company Group and in perpetuity thereafter…”). This clause means that if I were to criticize the Company or any of the managers at any point for the rest of my life, then I would be in breach the covenants. (Again, my concern is linked to Covenant K, “Recovery of Expenses”.) The scope of this clause seems very wide. Any recommendations to limit my risks?
  6. Restricted Covenant L (“Survival of Obligations”). This clause states that “The provisions of this Agreement shall survive its termination.” This implies that the covenants are in place for perpetuity (related to point in #5 above). Again, is this standard? Should the Agreement have an End Date?
  7. “Performance Targets” are based on terms defined in the “Credit Agreement” (see first paragraph in Exhibit A). Am I entitled access to the Credit Agreement document, before signing this agreement?
  8. Clause 5(e) (“Acquisitions, Divestitures”). The first sentence in this clause states that the Company has the right to modify or adjust the “Performance Targets” at any time; however, the final sentence states that any modification or adjustment shall be final and binding. Is this contradictory?
  9. Restricted Covenant G (“Amendment”). This clause states that “The terms of this Agreement may only be modified in a writing signed by you and an officer of the Company”. Does this contradict Clause 5(e)? (i.e., “the Company reserves the right to adjust or modify the Performance Targets” – see #8 above)
  10. Clause 5(c)(i) (“Recoupment and Forfeiture”). What does this clause mean? Does it mean that if I breach any covenant more than one year after the Settlement Date, then recoupment and forfeiture does not apply?
    1. What happens if a breach occurs before Units are paid?
    2. What happens if no Units were paid (due to below-target company performance) and there is a subsequent breach?
  11. Restricted Covenant I (“Governing Law”). What is the implication of waiving “trial by jury”? Should I accept this?
  12. Clause 6(d) (“Section 409A”). What is Section 409A of the Code?












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