EXECUTIVE BONUS AGREEMENT



EXECUTIVE BONUS AGREEMENT

THIS EXECUTIVE BONUS AGREEMENT (“Agreement”) made on Month Date, Year and entered into by and between Your Company, a State limited liabilty company (or corporation) (the “Employer”), and Your Employee (the “Executive”).

1. This Agreement is intended to advance the interests of the Employer by providing Executive as a key member of Employer’s management structure with a benefit program that will serve as an additional incentive for him or her to provide the success of the Employer and encourage him or her to maintain his or her employment relationship with the Employer and to reward him for his past efforts.

2. The Employer agrees to pay that portion of the annual premium necessary to maintain the mortality portion of life insurance Policy No. 123456789 insuring Executive’s life issued by Life Insurance Company, and owned by Executive as long as Executive remains employed by the Employer. Employer reserves the right to pay any additional amounts toward premiums as it so decides.

3. The Executive will execute an endorsement or other restrictive agreement on the policy restricting the Executive’s right to (i) surrender the policy for its cash value, (ii) obtain a policy loan from the insurance company, (iii) assign the policy as collateral, (iv) change the ownership of the policy by endorsement or assignment, (v) change insured, or (vi) request settlement of the policy proceeds on the maturity date, without consent of the Employer. However, the Employer shall not be entitled to receive any benefits under the policy.

4. Employer shall release the endorsement after five (5) years of full time service after implementation of this Agreement. If Executive’s employment is terminated for any reason by either party before the expiration of said five (5) year period, the Employer shall release the endorsement or restrictions upon the reimbursement by Employee, as discussed in Paragraph 5 below, provided the Employer is under no obligation to release the endorsement or restriction prior to the later of the expiration of said five (5) year period or later until reimbursement as discussed in paragraph 5 below.

5. The Executive will recognize the premium paid hereunder as additional compensation for federal and state income tax purposes.

6. Employer shall have the right to withhold amounts due to Executive for all income taxes resulting from this Agreement.

7. If Executive’s employment with Employer is terminated within five (5) years from the date hereof for any reason, then Executive will not be required to reimburse Employer for any portion of the cash surrender value of the policy.

8. The Executive recognizes and acknowledges that the Employer has developed and established valuable methods, procedures and customs information used in the operation of its business and that said methods, procedures and customs information are special and unique assets of Employer’s business. Executive hereby acknowledges and agrees that the aforementioned methods, procedures and customs information derived from their relationship with the Employer constitutes trade secrets and confidential information of the Employer. The Executive agrees that during the term of this Agreement with the Employer and after Executive’s termination of employment with Employer, Executive will not disclose or make use of such trade secrets and confidential information, including but not limited to: a customer list and other business information pertaining to each such customers; customer contracting requirements; the contracting services purchased by the customer or price charged customers for the services provided; or unique methods and procedures used by the Employer in the operation of the Employer’s business, including, but not limited to training programs, employee manuals or marketing techniques.

If the employment with the Employer of Executive hereunder should be terminated for any reason, whether either voluntarily or involuntarily, by Employer or Executive, or otherwise, Executive will not directly or indirectly, for a period of time ending two (2) years after Executive’s termination of employment with Employer solicit, call upon, service, assist, quote to, contact, converse or correspond with any customer of the Employer as of the date of termination and any customer of the Employer who was a customer within two years of the date of termination. It is the intent of this restrictive covenant not to permit Executive to unfairly compete against Employer in the defense contracting business by reason of exposure to trade secrets, confidential information, and the knowledge such Executive has acquired concerning the Employer’s business, customers and/or active prospects of the Employer while having an agreement with Employer.

If the employment of Executive should be terminated either voluntarily or involuntarily, Executive should be terminated either voluntarily or involuntarily, Executive will not, directly or indirectly, for a period of time ending two (2) years after Executive’s termination of employment with Employer, hire, employ or contract with any individual who is an employee of the Employer without the prior written consent of the Employer.

Executive hereunder acknowledges and agrees that the period and parameters of these restrictive covenants are reasonable and necessary to protect the Employer’s legitimate protectable business interest.

9. Special Provisions - The following provisions are part of this Agreement and are intended to meet the requirements of the Employee Retirement Income Security Act of 1974:

a. The named fiduciary: The Chief Financial Officer of the Employer.

b. The funding policy under this Plan is that all premiums on the Policy shall be remitted to the Insurer by the Employer when due.

c. Direct payment by the Insurer is the basis of payment of benefits under this Plan, with those benefits in turn being based on the payment of premiums as provided in the Plan.

d. For claims procedure purposes, the “Claims Manager” shall be the vice-president of the Employer.

(1) If for any reason a claim for benefits under this Plan is denied by the Company, the Claims Manager shall deliver to the claimant a written explanation setting forth the specific reasons for the denial, pertinent references to the Agreement section on which the denial is based, such other data as may be pertinent and information on the procedures to be followed by the claimant in obtaining a review of his claim, all written in a manner calculated to be understood by the claimant. For this purpose:

(A) The claimant’s claim shall be deemed filed when presented orally or in writing to the Claims Manager.

(B) The Claims Manager’s explanation shall be in writing delivered to the claimant within 90 days of the date the claim is filed.

(2) The claimant shall have 60 days following his or her receipt of the denial of the claim to file with the Claims Manager a written request for review of the denial. For such review, the claimant or his or her representative may submit pertinent documents and written issues and comments.

(3) The Claims Manager shall decide the issue on review and furnish the claimant with a copy within 60 days of receipt of the claimant’s request for review of his or her claim. The decision on review shall be in writing and shall include specific reasons for the decision written in a manner calculated to be understood by the claimant, as well as specific references to the pertinent Agreement provisions on which the decision is based. If a copy of the decision is not so furnished to the claimant within such 60 days, the claim shall be deemed denied on review.

10. Miscellaneous.

a. Governing Law. This Agreement is being delivered and is intended to be performed in the State/Commonwealth of _______ and shall be construed and enforced in accordance with the laws of State.

b. Revocation. This Agreement revokes all previous agreements among the Parties to the extent they are inconsistent herewith.

c. Notices. Any notices required or permitted to be given hereunder shall be sufficient if in writing and if sent by certified or registered mail to the residence of Executive or principal office of Employer.

d. Waiver of Breach. The waiver by any parry of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by any party.

e. Entire Agreement. This instrument contains the entire agreement of the parties with respect to the subject matter hereof. There are no representations, conditions or obligations except as herein specifically provided. Any waiver, amendment or modification hereto must be in writing and must be signed by both parties.

f. Severability. If any provision of this Agreement becomes or is found to be illegal or unenforceable for any reason, such clause or provision must be first modified to the extent necessary to make this Agreement legal and enforceable and then if necessary, second, severed from the remainder of the Agreement to remain in full force and effect.

g. Venue. Venue and jurisdiction for any legal action arising under this Agreement shall be in the Circuit Court of the City of _________, State of ________, or any other location mutually agreed to by the parties.

h. Attorneys’ Fees. If either party shall commence any action or proceeding against the other in order to enforce the provisions hereof, or to recover damages resulting from the alleged breach of any of the provisions hereof, the prevailing party therein shall be entitled to recover all reasonable costs incurred in connection therewith, including, but not limited to, reasonable attorneys’ fees.

i. Counterparts - Facsimile Signatures. This Agreement may be executed in one or more counterparts, all of which together shall constitute one instrument. A facsimile copy of a signature on this Agreement shall be acceptable as and deemed an original signature.

j. Agreement Binding. When signed by all of the parties, this Agreement shall be binding upon the parties, their representatives, heirs, successors and assigns. This Agreement is a product of the negotiation of all of the parties. For convenience counsel for Employer has drafted it. This Agreement shall not be construed in favor of or against any party hereto.

k. Executive’s Employment. Nothing contained in this Agreement, and no action of the Employer shall confer or be construed to confer on the Executive any right to continue in the employ of the Employer or interfere in any way with the right of the Employer to terminate the Executive’s employment at any time, with or without cause; subject, however, to the provisions of any employment agreement between the Executive and the Employer.

1. Insurance Company. Executive understands and consents to this Agreement being filed with the company issuing the life insurance policy that is the subject of this Agreement.

m. Further Assurances. Executive shall execute and deliver or cause to be executed and delivered to the Employer such further instruments and shall take such other action as the Employer may reasonably require to help effectuate the contemplated transactions and implement the restrictions provided herein.

n. Amendment and Termination. This Agreement may only be amended with the mutual written agreement of Employer and Executive. This Agreement may be terminate by the Employer at any time. Any amendment or termination of this Agreement shall not affect any benefits that were awarded.

WITNESS WHEREOF the Parties have executed this Agreement this _____ day of Month, Year.

Employer: Your Company Name

By: __________________________________________

Your Name, Manager

Executive: __________________________________________

Employee’s Name

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