The "proper cause" clause specifies that any action or decision by a party, such as termination of a contract, must be based on a legitimate and justifiable reason that is aligned with the terms agreed upon in the contract. This clause is intended to prevent arbitrary or unfair actions and ensure that both parties adhere to agreed standards and expectations.
3.4 Proper Cause. The Company may terminate the Executive’s employment under this Agreement for “proper cause,” without prior notice (except as otherwise specified in Sections 3.4(a) and 3.4(d), each requiring prior notice in accordance with Section 6.1 of this Agreement (“Notice”)). As used in this Agreement, “proper cause” shall be:
Voluntary Termination and Termination for Proper Cause. If the Executive voluntarily terminates his employment under this Agreement during the Term other than for “good reason” under Section 3.5 hereof or the Company, with or without prior notice, terminates the Executive’s employment under this Agreement for “proper cause” under Section 3.4 hereof, and provided such termination constitutes a separation from service for purposes of Section 409A, all of the Executive’s rights and benefits, accrued or payable, present or future, under this Agreement including all rights and benefits under any fringe benefit plan or agreement ancillary to this Agreement, shall be immediately forfeited by the Executive. In such event, the Executive’s only rights and benefits shall be to receive base salary compensation accrued through the Termination Date, unpaid reimbursable expenses incurred for the benefit of the Company prior to the Termination Date, vested benefits or amounts under any savings or retirement plans (including excess benefit plans), deferred compensation arrangements or welfare benefit plans, and vested cash and equity amounts with respect to long-term incentive awards and other incentive awards granted to the Executive.
Upon application of any shareholder or director, a court may remove from office any director in case of fraudulent or dishonest acts, or gross abuse of authority or discretion with reference to the Corporation, or for any other proper cause, and may bar from office any director so removed for a period prescribed by the court. The Corporation shall be made a party to the action and, as a prerequisite to the maintenance of an action under this Section 10.5, a shareholder shall comply with Section 1782 of the PaBCL.
Subject to the conditions and limitations of any applicable supplement to the Plan, for purposes of this subsection 3.1, a termination of employment for “Proper Cause” shall include (but shall not be limited to) termination of employment for any willful or grossly negligent breach of the Participant’s duties as an employee of the Employer and termination for fraud, embezzlement or any other similar dishonest conduct, or for violation of Employer’s rules of conduct.
The Board of Directors may declare vacant the office of a Director who has been judicially declared of unsound mind or who has been convicted of an offense punishable by imprisonment for a term of more than one (1) year or for any other proper cause which these Bylaws may specify or if, within sixty (60) days or such other time as these Bylaws may specify after notice of his selection, he does not accept the office either in writing or by attending a meeting of the Board of Directors and fulfill such other requirements of qualification as these Bylaws may specify.
“Proper cause” is a term often used in legal and contractual contexts, typically referring to a legitimate, legal reason for making a change, taking an action, or enforcing a condition within a contract. It serves as a safeguard to ensure that any actions taken under the contract are justified and adhere to the agreed-upon terms.
You should use “proper cause” when you need to justify an action or decision within the context of a legal agreement. It is commonly invoked in situations such as:
When drafting a clause regarding proper cause, clarity, specificity, and comprehensiveness are crucial. A well-written proper cause clause should:
Example of writing proper cause:
“In the event of a material breach by one party, the non-breaching party shall have proper cause to terminate this Agreement, provided that written notice of the breach is given and the breach is not cured within thirty (30) days of such notice.”
Proper cause clauses are often found in contracts where ongoing performance is required and termination or modification of the contract could have significant consequences. Typical contracts include:
By including a clearly defined proper cause clause, parties can ensure transparent and fair operations within their contractual relationship.
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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.
A proprietary property clause in a contract defines the ownership rights and interests associated with proprietary or intellectual property created or used during the course of a contractual relationship. It typically stipulates the conditions under which one party retains or transfers ownership, ensuring protection and proper attribution of proprietary assets or content.
The Proprietary Rights clause in a contract typically outlines the ownership and control of intellectual property or confidential information exchanged or developed during the term of an agreement. It ensures that any proprietary information remains the property of its original owner and may establish how this information can be used, shared, or protected throughout and after the contract's duration.
A proprietary clause in a contract is designed to protect the ownership rights of specific information, materials, or technology belonging to a party involved in the agreement. It ensures that the proprietary information remains confidential and is not used, shared, or disclosed without explicit permission from the owner.
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