Employee Confidentiality Agreement Template

An employee retention agreement is a legal agreement between an employer and a key employee whose services the company wishes to retain. When employees know that their company might be acquired, they understand that their employment security may be endangered. In these situations, firms that want to ensure the loyalty of these employees and the ongoing commitment that is sometimes felt in the interest of the company and its shareholders to provide the employee an incentive to pursue his employment and to motivate the employee to maximize the value of the firm on a potential change of control.

Employee Retention Agreements generally provide a bonus structure and the initial model for key employees, and may include substantial severance pay, acceleration of stock options or other benefits from the company deems necessary to preserve the employees. The drafters of these agreements should also pay attention to include, where appropriate, the following provisions:

1. Duration of the agreement. The agreement would probably end on the earlier of: (a) the termination of the employee for any reason before a change of control, or (b) the date on which all obligations of the parties with respect to this Agreement have been met. That provision should be drafted accordingly.

2. At will USE. Where appropriate, the company and the employee must both recognize that employment of the employee and must continue to be at will, as defined by applicable law. If an employee is terminated for any reason before a change of control, the employee is not entitled to benefits under this Agreement, or any other benefits unless otherwise decided in accordance with the plans of the Company employees and established practices or under other agreements with the Company.

3. Definition of Terms. It is important that the following terms referred to in this Agreement is defined:

(A) Change of Control. "Change of Control" can be read as meaning the sale of all or almost all of the assets of the Company or a merger, consolidation or other recapitalization of the Company with or into another corporation . Some limitations of this definition may also be applicable.

(B) Because. "Cause" termination of employment shall be defined to mean the good faith judgments of the Board of Directors of the Company, the undersigned has engaged in or committed any of the following: (i) gross negligence or willful misconduct in the performance of his duties to the Company, (ii) repeated unexplained or unjustified absence from the Company, (iii) a material and willful violation of federal or state law, (iv) the commission any act of fraud against the Company, (v) breach of any obligation of confidentiality to the Company, as determined by agreement or by applicable law, or (vi) conviction of a felony or misdemeanor involving moral turpitude causing material harm to the reputation and the reputation of the Company.

(C) dismissal. "Dismissal" should be defined as occurring if is here (1) (a) an adverse change in the employee's position causing such position to be materially reduced responsibility, (b) any reduction in pay basis of the employee, or (c) Employee refusal to relocate to a facility or location more than 50 miles from the current location of the Company, and (2) within 30 days following immediately one of the events above, the employee chooses to terminate his employment voluntarily.

4. BENEFITS separation involuntary termination following a change of control. The employee may wish to include a provision which stipulates that within one year from the effective date of a change of control, employment of the employee to the Company is terminated (termination "involuntary").