diff --git a/src/delegation/headless-executor.ts b/src/delegation/headless-executor.ts
index 977b5ff7..da95e746 100644
--- a/src/delegation/headless-executor.ts
+++ b/src/delegation/headless-executor.ts
@@ -330,6 +330,7 @@ export class HeadlessExecutor {
               clearInterval(progressInterval);
               process.stderr.write('\r\x1b[K');
             }
+            // Longer grace period for timeout (vs 2s for SIGINT) since delegated sessions may need time to flush output
             killWithEscalation(proc, 10000);
           }
         }, timeout);
diff --git a/src/utils/process-utils.ts b/src/utils/process-utils.ts
index ac22f8ba..571ce743 100644
--- a/src/utils/process-utils.ts
+++ b/src/utils/process-utils.ts
@@ -16,5 +16,6 @@ export function killWithEscalation(proc: ChildProcess, gracePeriodMs = 3000): vo
       proc.kill('SIGKILL');
     }
   }, gracePeriodMs);
+  timer.unref(); // Don't keep event loop alive just for escalation
   proc.once('exit', () => clearTimeout(timer));
 }
diff --git a/tests/unit/utils/process-utils.test.ts b/tests/unit/utils/process-utils.test.ts
new file mode 100644
index 00000000..cfae232a
--- /dev/null
+++ b/tests/unit/utils/process-utils.test.ts
@@ -0,0 +1,132 @@
+/**
+ * Unit tests for process-utils.ts
+ */
+import { describe, it, expect, beforeEach, afterEach, jest } from 'bun:test';
+import { EventEmitter } from 'events';
+import { killWithEscalation } from '../../../src/utils/process-utils';
+import type { ChildProcess } from 'child_process';
+
+// Mock ChildProcess using EventEmitter
+function createMockProcess(exitCode: number | null = null): ChildProcess {
+  const proc = new EventEmitter() as any;
+  proc.killed = false;
+  proc.exitCode = exitCode;
+  proc.kill = jest.fn((signal?: string) => {
+    if (signal === 'SIGTERM' || signal === 'SIGKILL') {
+      proc.killed = true;
+    }
+    return true;
+  });
+  return proc as ChildProcess;
+}
+
+describe('killWithEscalation', () => {
+  beforeEach(() => {
+    jest.useFakeTimers();
+  });
+
+  afterEach(() => {
+    jest.useRealTimers();
+  });
+
+  it('should send SIGTERM immediately', () => {
+    const proc = createMockProcess();
+    killWithEscalation(proc);
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+  });
+
+  it('should send SIGKILL after grace period if process still running', () => {
+    const proc = createMockProcess(null); // exitCode null = still running
+    killWithEscalation(proc, 3000);
+
+    // SIGTERM sent immediately
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+
+    // Advance time by grace period
+    jest.advanceTimersByTime(3000);
+
+    // SIGKILL sent after grace period
+    expect(proc.kill).toHaveBeenCalledWith('SIGKILL');
+    expect(proc.kill).toHaveBeenCalledTimes(2);
+  });
+
+  it('should NOT send SIGKILL if process exits before grace period', () => {
+    const proc = createMockProcess(null);
+    killWithEscalation(proc, 3000);
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+
+    // Simulate process exit after 1 second
+    jest.advanceTimersByTime(1000);
+    proc.exitCode = 0; // Process exited
+    proc.emit('exit', 0);
+
+    // Advance remaining time
+    jest.advanceTimersByTime(2000);
+
+    // SIGKILL should NOT have been sent
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+    expect(proc.kill).not.toHaveBeenCalledWith('SIGKILL');
+  });
+
+  it('should use default grace period of 3000ms', () => {
+    const proc = createMockProcess(null);
+    killWithEscalation(proc); // No grace period argument
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+
+    // Advance by default 3000ms
+    jest.advanceTimersByTime(3000);
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGKILL');
+  });
+
+  it('should respect custom grace period', () => {
+    const proc = createMockProcess(null);
+    killWithEscalation(proc, 5000); // Custom 5 second grace period
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+
+    // Advance by less than grace period
+    jest.advanceTimersByTime(4999);
+    expect(proc.kill).toHaveBeenCalledTimes(1); // Still only SIGTERM
+
+    // Advance to grace period
+    jest.advanceTimersByTime(1);
+    expect(proc.kill).toHaveBeenCalledWith('SIGKILL');
+  });
+
+  it('should clear timer when process exits', () => {
+    const proc = createMockProcess(null);
+    killWithEscalation(proc, 3000);
+
+    // Simulate immediate exit
+    proc.exitCode = 0;
+    proc.emit('exit', 0);
+
+    // Advance way past grace period
+    jest.advanceTimersByTime(10000);
+
+    // Should only have SIGTERM, timer was cleared
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+  });
+
+  it('should handle process that already exited', () => {
+    const proc = createMockProcess(0); // Already exited
+    killWithEscalation(proc, 3000);
+
+    expect(proc.kill).toHaveBeenCalledWith('SIGTERM');
+
+    // Even though exitCode is not null, timer still fires
+    // (because we check exitCode at timer callback time)
+    jest.advanceTimersByTime(3000);
+
+    // SIGKILL should NOT be sent because exitCode is not null
+    expect(proc.kill).toHaveBeenCalledTimes(1);
+  });
+});