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HANDOUT 3 SAMPLE EMPLOYMENT CONTRACT Dear __________________ . On behalf of the Board of Trustees of [FOUNDATION] we are delighted you have agreed to accept our offer to continue as Director of the Foundation. This letter will serve to confirm our understanding and becomes a contract between the Board of Trustees of [FOUNDATION] (the Board) and you. It is subject only to your agreement to the terms by signing and returning one of the enclosed copies. We have agreed that effective______________, the terms and conditions of this contract shall replace in its entirety the letter of agreement dated __________, amended orally or in writing since then, which describes your current terms of employment. 1. Terms: Your second term as Director of the Foundation shall be for three years beginning on __________ and shall extend through __________ (the term). This contract, if mutually agreed by the Foundation and you, may be extended for a mutually agreed upon term, provided that positive performance reviews were completed in previous years. Duties: You shall faithfully serve the Foundation as its chief operating officer with the title of Director. You will have the responsibility for managing the day-to-day administrative and grantmaking operations of the Foundation subject to and in accordance with your job description, the policies set and procedures adopted by the Board and Co-Chairs, and which are of a nature properly belonging to the duties of a foundation director. You will report directly to the Board through the Co-Chairs. At all times you shall devote your whole time, attention, and energies to the management, superintendence, and improvement of the Foundation to your utmost ability. 3. Salary: Effective __________ your salary will be at the annual rate of $ __________. Thereafter, as a result of your annual performance review, your salary revision, if any, shall be effective on __________ of each anniversary during the duration of this contract. Your annual base salary rate shall include any merit increases awarded at the sole discretion of the Foundation, as well as an annual cost of living adjustment based on the COLA provided to federal workers. 4. Benefits: Except as provided below, benefits provided to the staff of the Foundation shall be provided to you under the terms and conditions (which may change from time to time) as described in the [FOUNDATION] Employee Manual and associated documents and insurance policies (the “Employee Manual). These benefits now include: health care benefits, long term disability income, workers compensation, cafeteria plan, group life insurance, vacations, holidays, and side/disability leave. Sample Offer Letter Page 2 In addition to the benefits described in the Employee Manual, during your employment as Director you shall have the benefits listed below. When the following benefits are supplemental to benefit plans at the Foundation, the definitions in such plans shall apply to the interpretation and implementation of the supplemental benefits. a) You shall continue to receive a monthly travel allowance for your monthly train ticket. b) The Foundation will continue to pay for a club membership [ ] for your use. Expenses incurred by you in pursuit of Foundation business will be reimbursed per Foundation policies. c) You shall be entitled to up to two (2) months Professional Development Leave after your third year of employment ___________, provided: i) scheduling is approved with the Co-Chairs and staff so as not to interfere with the normal operations of the Foundation, ii) a specific plan is presented in writing detailing how this Leave will increase your professional capabilities and your value to the Foundation, and a written or oral report is presented to the Board and staff. 5. Performance Review: To enhance communications and coordination among the Board, Co-Chairs and the Director, and as a way to evaluate your achievements as Director and adjust your compensation, a performance review shall be undertaken annually. The evaluation shall be based on an annual performance plan to be mutually developed and agreed to by the Director and the Board. Its essential elements are to include: (i) the Board shall designate the Co-Chairs or a committee of the Board to conduct the performance review; (ii) annual and long term goals and objectives for your work shall be set jointly with you; (iii) the Board and all staff will be polled for their opinions and evaluation of the Director's work and leadership; and (iv) the Co-Chairs or committee shall review with you annually the attainment of these goals and objectives. The annual performance review shall be completed no later than __________ of each year and should include a meeting based on a formal written evaluation. The annual performance plan and list of goals and objectives for your work shall be completed no later than the third month following the date of this Agreement and annually thereafter by ___________. 6. Cancellation: This contract shall end prior to ___________ when any one of the following conditions apply: a) If you die during the term of this contract, the Foundation shall guarantee payment of benefits to your estate or beneficiaries that are due pursuant to this agreement up to the date of death and to any applicable [ ] benefit plan. b) If you are dismisses at my time for willful failure to substantially perform your duties, and such failure shall persist unresolved for thirty (30) days after receiving written notice, the Foundation shall have no further obligation to you. Before a dismissal decision is Sample Offer Letter Page 3 made, you, as Director, shall receive adequate notice of the reasons underlying the Board's concern and shall have the opportunity to respond and be represented at a meeting of the Board or a committee appointed by the Board or its Executive Committee. c) The Foundation may cancel this Agreement for any reason, with or without cause, which need not be disclosed to Director, by giving Director thirty (30) days notice in writing, and then paying to Director severance consisting of six (6) months salary plus one additional month salary for each year (or pro rated portion thereof) of completed service to the Foundation, in addition to all accrued vacation or personal days, and any unused or pro rated Professional Development Leave. d) Director may cancel this Agreement by giving the Foundation at least four (4) months advance notice in writing. The Foundation agrees to pay Director a Longevity Bonus if you depart after __________, consisting of the same severance in 6c above. This provision would be made in recognition of the extended service you have provided to the Foundation during a period of difficult transitions. e) In the event of termination, the Foundation and Director agree they will not make derogatory comments concerning the other and, except in the case of 6a and 6b above, that the Foundation will provide the Director with a letter of recommendation. Effective on the termination date of this contract, or on the date this contract may be cancelled prior to the termination date as provided above, you shall surrender all administrative titles, and duties. Other than as specifically provided in this Agreement or in the Employee Manual, the Foundation shall have no further obligation under this agreement. 7. Indemnification: The [FOUNDATION] shall indemnify, hold harmless, and defend Director against all claims arising against Director, his heirs, administrators and/or executors in connection with his employment with the Foundation as permitted by law and to the extent provided for in its Bylaws for the indemnification of officers as of the date hereof, and such indemnification shall remain in effect regardless of any revision to the Foundation's Bylaws. Director shall immediately notify the Co-Chairs and legal counsel of the Foundation orally and in writing upon learning of any actual or threatened dispute or legal process and shall cooperate fully in any defense or action. 8. Renewal: If it is our mutual intent to extend the duration of your employment beyond the terms and conditions of this agreement, discussions for the terms and conditions of a new or extended contract should begin no later than ____________ and be concluded by ____________. Subject to the provisions of Section I above, without a contract completed in the specified time frame, your employment shall end. Sample Offer Letter Page 4 This Agreement contains the entire Agreement between the Foundation and Director. It may not be changed or renewed orally but only by an Agreement in writing signed by the Co-Chairs of the Board and by the Director. This Agreement supersedes and cancels all previous agreement between the Foundation and-Director. We hope you will find these terms acceptable and that you will continue with us in what we believe is an important philanthropic endeavor. Sincerely,