L A W O F F IC E S HOWE & HUTTON, LTD. S T . L O U IS O F F IC E : 2 0 N O R T H W AC KE R D R IV E W A S H IN G T O N , D C O F F IC E : 1421 BUCKHURST COURT C H IC A G O , ILLINOIS 60606-9833 1901 PENNSYLVANIA AVENUE, N.W. BALLWIN, MISSOURI TELEPHONE 63021 (636) 256-3351 FAX (636) 256-3727 TELEPHONE (312) 263–3001 FAX (312) 372–6685 SUITE WASHINGTON, DC TELEPHONE __________ 1007 20006 (202) 466-7252 FAX (202) 466-5829 hh@howehutton.com SAMPLE CHAMBER EXECUTIVE EMPLOYMENT AGREEMENT INTRODUCTION Thank you for your request for a copy of our Sample Chamber Executive Employment Agreement. When we first prepared a sample employment contract in 1974, written employment agreements for chambers and chief staff executives of not-for-profit organizations were rare. This agreement reflects our experience in serving as general counsel for over 250 local, state, regional, national and international chambers, professional societies and other not-for-profit organizations. Additionally, we have had the opportunity to work with over 500 other chambers and societies and their executives and boards for special assignments. Howe & Hutton, Ltd. prides itself on our total dedication to representing not-for-profit organizations from our offices in Chicago, Washington, D.C., and St. Louis. Because we are only a telephone call, email, or fax message away, we are readily available to our clients and potential clients regardless of location. No matter where you are or whom you work with, we feel strongly, both from the standpoint of the chamber executive as well as the organization itself, there is a definite need for a well-written and thoughtful employment contract. Boards are coming of age and as a result are more concerned about performance, job description, cost of benefits, and termination possibilities than ever before. Job security and the ability to make needed, but perhaps unpopular decisions, are real issues for the executive. This 2004 Sample Agreement, consistent with recent tax law changes, attempts to address, in a balanced manner, these conflicting but legitimate concerns. Revised May 2004. © Copyright 2004. Jonathan T. Howe, Esq., and Howe & Hutton, Ltd., Chicago, Illinois, Washington D.C., and St. Louis, Missouri. All rights reserved under International and Pan-American copyright conventions. No reproduction or any other means of republication are allowed, including quotation, without the prior written permission of the copyright holders. This sample is designed to provide accurate and authoritative information in regard to its subject matter. If legal advice or other expert assistance is required, the services of a competent professional person should be sought, since this sample is not intended to replace legal or other professional services through its publication. This Sample Agreement is exactly that — a sample. No single agreement or form is satisfactory for all applications. However, it does reflect many of the common benefits afforded to chamber executives in today's economic climate. SOME WORDS ABOUT INCOME TAXATION Most of the "fringe" benefits described in this Sample Agreement have federal, and in some cases, appropriate, state and local income tax consequences. It is a principle under federal tax laws that "gross income" is to include all income regardless of source unless it is specifically excluded. "Gross income" even includes employee benefits, the cost of which, if not paid by the employer, would be borne by the employee. The tax laws do specify a number of benefits that are tax-free (e.g., group term life insurance up to $50,000 and health and medical plans) or tax-deferred (e.g., qualified retirement contributions and non-qualified deferred compensation, if structured properly), but they are certainly subject to change, as we‘ve seen in recent years. In order to exclude such benefits from income, an employer often has to make the benefit available to lower paid employees as well as executives. These are referred to as "nondiscrimination" rules because they prohibit favoritism for highly paid employees. With the Tax Reform Act of 1986, Congress attempted to strengthen and make uniform the nondiscrimination rules for a number of non-retirement benefits such as group term life insurance and health benefits. In 1993, additional changes were made as to the treatment of "spouse" expenses, caps on qualified retirement plan benefits and other issues. Many benefits are excluded from income if they are provided as a "plan" meeting nondiscrimination rules for the benefit of employees. An individual employment contract is not such a plan. Some of the contract benefits, as a result, may be taxable income to the executive. An increased compensation level may be negotiated to compensate for the executive’s tax cost. Tax consequences, however, should not be the primary objective in negotiating such benefits. From the executive’s point of view, it is better to have a benefit and be taxed on it than to not have it at all. Retirement plans and deferred compensation are another highly technical area, particularly with respect to tax-exempt organizations. They are generally of two types: "qualified" or "nonqualified." A qualified plan allows current deductions for employer contributions (not especially beneficial for a tax-exempt organization), tax-free investment growth, special protection from creditors, and deferred taxation to employees until benefits are received. There are a myriad of technical rules a qualified plan must meet, including nondiscrimination rules, minimum vesting (nonforfeiture) of benefits, participation and coverage requirements and contribution limits. Many tax-exempt employers do not offer qualified plans because of their complexity. Instead, the executive enters into a non-qualified deferred compensation agreement. In addition, especially in light of last year’s tax law changes, executives often can enter into non-qualified 533578628 deferred compensation arrangements to supplement their qualified plan retirement savings. Under a non-qualified deferred compensation agreement, the executive defers receipt of income to defer taxation on that income. To do this, the executive must be subject to real possible non-receipt of the deferred income, i.e., a “substantial risk of forfeiture,” or the arrangement must conform to specified tax rules (i.e., be an “eligible deferred compensation plan” under Internal Revenue Code (IRC) Section 457(b)) which include a dollar limitation on the amount that can be deferred, whether or not the deferral is elective. Simply making the deferred income subject to the claims of the exempt organization’s general creditors if the employer becomes insolvent, or including certain "bad boy" provisions in the event of termination of the executive for cause, will not constitute a “substantial risk of forfeiture.” Even a covenant not to compete or to provide consulting services may not constitute a substantial risk of forfeiture under the circumstances of the executive in question. Legislation enacted in 2001 made changes to IRC Sections 401(k), 403(b) and 457(b) plans, as well as to IRA limits, ratcheting up the contribution limits annually from 2002 through 2006. There were also new provisions for individuals over age 50 who will be permitted to make “catchup” contributions to their IRAs and employer-sponsored retirement savings plans (401(k) and 403(b) plans, but not 457(b) plans except for governmental programs), starting in 2002. Elective contribution limits have changed each year since 2001 and are scheduled to continue to do so through 2006. For 2004, the maximum elective contribution is $13,000, plus an additional $3,000 for those at least 50 years of age, i.e., $16,000 in total for a chamber executive at least 50 years old. Those dollar limits continue to increase by $1,000 each year through 2006, so that in 2006 the maximum elective contribution is $15,000, plus an additional $5,000 for those at least 50 years of age, i.e., $20,000. Section 457 of the IRC generally limits the amount an employee of a tax-exempt employer may defer without incurring a substantial risk of forfeiture. Most importantly for highly compensated chamber executives, beginning in 2002 (1) maximum contributions to non-qualified 457(b)/eligible deferred compensation plans ($8,500 in 2001) are increased to the above limits, except for the age 50 or over catch up allowance and (2) maximum available 457(b) contributions are no longer reduced by elective contributions to qualified plans, such as to a 401(k) plan. Thus, in 2004 a 50-year-old chamber executive can make a $16,000 elective contribution to the chamber’s 401(k) plan and have $13,000 deferred into a non-qualified 457(b) eligible deferred compensation plan. (In 2006, scheduled increases would allow both a $20,000 elective contribution to a 401(k) plan and a $15,000 contribution to a 457(b) nonqualified plan.) If a greater amount of non-qualified deferral is desired, other arrangements may be made, but would typically require a “substantial risk of forfeiture” to defer taxation. Note, however, that the chamber could also make non-elective qualified plan contributions without interfering with these elective limitations, although other qualified plan limitations may come into play. To ensure the earmarking of the benefit of non-qualified deferred compensation and its related funds, a trust (commonly called a "Rabbi Trust") should be considered. With such a trust, the employer contributes funds to a trustee. The trustee, by the terms of the trust, is obligated to provide the benefit to the executive unless the employer chamber is insolvent. In the unlikely event that occurs, the funds are held for the benefit of the organization's general creditors, including the executive. 533578628 Compensation and estate planning are more complicated than ever, so employment contracts, benefit plans, and whether maximum utilization is being made of available employee fringe benefits and qualified retirement and non-qualified deferred compensation plans should be reviewed annually. USE OF THIS SAMPLE AGREEMENT As with any legal document, competent legal and tax advice should be sought in advance to protect the interests of all of the parties. Employment agreements, in particular, are extremely detailoriented and encompass a wide range of terms and obligations. A well-drafted, comprehensive agreement that is responsive to the current flux in the tax laws will further a chamber’s and its executive’s security, both as employer and employee. Howe & Hutton, Ltd.’s tax and employee benefit attorneys would be pleased to be of service in advising on the tax consequences of any particular benefit or employment agreement, and would be pleased also to assist in the drafting of any employment contract. This Sample Agreement, as is this preface, is copyrighted. If you desire to make additional copies for distribution or to use all or any portions of it, we request that you obtain our consent before doing so. If we can be of any further service to you, your chamber or society, please contact us. 533578628 SAMPLE CHAMBER EXECUTIVE EMPLOYMENT AGREEMENT AGREEMENT entered into this day of , 200_, by and between ______________________ ("EXECUTIVE") and ___________________________________ ("CHAMBER"), a(n) ______________________ not-for-profit corporation. IT IS AGREED: 1. Employment Term - CHAMBER hires and retains EXECUTIVE for the term beginning _________________________, 200__ through ______________, 200__ as (title) _______________________ of CHAMBER. [See Other Optional Clauses at end of Sample.] 2. Duties and Responsibilities - EXECUTIVE shall perform the duties and responsibilities of _____________ in accordance with CHAMBER Bylaws, rules and regulations and shall provide executive management services for CHAMBER as set forth in the job description attached to this Agreement as Exhibit A, and any amendments made in accordance with Section 9 of this Agreement. [Note: The job description should include goals to be achieved, and afford the basis for a performance evaluation. See Section 9.] EXECUTIVE shall perform such other duties and services as may be entrusted to EXECUTIVE by CHAMBER in accordance with its Bylaws and consistent with EXECUTIVE's office in CHAMBER and the terms of this Agreement. During the term of this Agreement, EXECUTIVE shall be the Chief Executive Officer of CHAMBER, and EXECUTIVE shall report and be responsible to the chief elected officer (Chairman of the Board) of CHAMBER. In addition, EXECUTIVE, as part of EXECUTIVE's responsibilities and consistent with this Agreement at no additional compensation, shall: 2.1 Have full and exclusive authority to hire, compensate and terminate CHAMBER staff within the approved budget of CHAMBER and to establish the job descriptions, duties and responsibilities of all staff in accordance with policies as may be established by the Board of Directors. 2.2 In consultation with the Executive Committee, retain legal counsel, public relations counsel, and other consultants for CHAMBER. Revised May 2004. © Copyright 2004. Jonathan T. Howe, Esq., and Howe & Hutton, Ltd., Chicago, Illinois, Washington D.C., and St. Louis, Missouri. All rights reserved under International and Pan-American copyright conventions. No reproduction or any other means of republication are allowed, including quotation, without the prior written permission of the copyright holders. This sample is designed to provide accurate and authoritative information in regard to its subject matter. If legal advice or other expert assistance is required, the services of a competent professional person should be sought, since this sample is not intended to replace legal or other professional services through its publication. 2.3 Recommend to the Board of Directors for its approval the selection of outside certified public accountants for CHAMBER. 2.4 Have the right to prior notice of and to be present at all meetings of the Board of Directors and Executive Committee of CHAMBER, except as otherwise provided in this Agreement or by CHAMBER policy. 2.5 Be provided by CHAMBER with a private office, secretarial and administrative assistance and such other personnel, facilities and equipment, consistent with EXECUTIVE’s position and adequate for the performance of EXECUTIVE’s duties as required under this Agreement. 2.6 If requested and agreed with no additional compensation, serve as the plan administrator (trustee or other fiduciary), as defined under the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, with respect to CHAMBER’s employee benefit programs, or as an officer, director, trustee, or delegate or representative to other chambers, organizations, corporations, or third party groups. [2.7 (Other items as may be appropriate.)] 3. Compensation - EXECUTIVE shall be paid as compensation an annual salary of $___________________ in ____ equal installments. This salary may be increased in accordance with action of CHAMBER as provided in this Agreement. The CHAMBER Executive Committee, based upon a formal evaluation process, shall review executive annually. EXECUTIVE shall be eligible for an achievable performance-based bonus, based upon mutually agreed upon goals established by the CHAMBER Executive Committee and the EXECUTIVE. [See Other Optional Clauses at end of Sample.] 4. Other Activities - During the term of this Agreement, except as otherwise agreed to by EXECUTIVE and the CHAMBER Executive Committee, EXECUTIVE shall not work for or with or accept or otherwise receive any compensation or other consideration from any other organization, firm, chamber, society, person, corporation, or otherwise, for services to be performed or performed by EXECUTIVE. However, EXECUTIVE may serve, for compensation or other consideration, as a lecturer or consultant to others, or engage in other activities of short duration which do not otherwise interfere with EXECUTIVE’s ability to perform or conflict with his/her responsibilities under this Agreement. In all such cases, EXECUTIVE shall inform the chief elected officer of CHAMBER before undertaking such activities. 5. Insurance 5.1 Life Insurance - 5.1.1 Term Life Insurance - CHAMBER shall provide and pay [a portion of] the premium for $___________ face amount 533578628 term life insurance, convertible and renewable, on the life of EXECUTIVE, [and $ face amount on the life of EXECUTIVE’s spouse and each child of EXECUTIVE,] with EXECUTIVE having the right to designate the beneficiary or beneficiaries. [NOTE: Up to $50,000 of Group Term Life Insurance may be provided tax free if pursuant to a plan which does not discriminate in favor of key employees. It may be desirable to go beyond the tax-free amount of $50,000 for the executive and $2,000 per dependent to obtain low cost insurance. Consult your tax and insurance advisors.] 5.1.2 Ordinary Life/Split Dollar Insurance - CHAMBER shall provide and pay in accordance with a separate agreement a portion of the premium on $ face amount whole life insurance plus double/( ) indemnity on the life of EXECUTIVE. Such premiums shall be paid by CHAMBER so as to afford split dollar benefits to the parties, with CHAMBER being a partial beneficiary under the policy, and EXECUTIVE having the right to designate the beneficiary or beneficiaries for the remainder of the proceeds of the policy. [NOTE: This is generally a taxable benefit, at least in part; split-dollar arrangements require careful professional attention and are potentially much less tax beneficial given recent IRS pronouncements regarding them.] 5.1.3 "Key Man" Insurance - In recognition of the unique responsibilities and expertise of EXECUTIVE, CHAMBER shall, at its own expense, secure and maintain "key man" insurance on the life of EXECUTIVE in such amount as CHAMBER deems necessary or appropriate. 5.2 Disability - CHAMBER shall provide and pay the premium for a long-term disability insurance policy providing for coverage to age at the rate of percent of EXECUTIVE’s salary at the time of disability after the day of disability as defined in the policy. In the event EXECUTIVE is receiving salary or other compensation from CHAMBER, EXECUTIVE shall reimburse CHAMBER for the amount of disability benefits received by EXECUTIVE during such time, but such reimbursement shall not exceed the amount received by EXECUTIVE from CHAMBER. [NOTE: The face amount typically must be adjusted each year as the executive’s salary changes, and the cost increases with a higher salary and increasing age each year. If the executive pays the premium instead of the chamber, the executive will avoid income taxation on the payment of any benefits for a disability claim. If the chamber pays the premium, any benefits are subject to income taxation. When the executive pays the premium, the chamber may offer a higher compensation level to offset the cost of the premiums. In all such cases, you should consult your tax advisor.] 533578628 5.3 Hospital, Health and Medical - CHAMBER shall provide and pay the premium for hospitalization and major medical insurance or other hospital, health and medical coverage as is provided other full-time employees of CHAMBER for EXECUTIVE and the members of EXECUTIVE’s immediate family. 5.4 Accidental Death and Dismemberment - CHAMBER shall provide and pay the premium for $ basic face amount insurance for the accidental death or dismemberment of EXECUTIVE, with 24 hours a day coverage. 5.5 Other Insurance - CHAMBER shall provide and pay the premium for such other insurance coverage, including but not limited to dental, orthodonture, psychiatric, vision, medical counseling and other similar coverage, as selected by EXECUTIVE, at a total annual premium rate for all such optional coverage not to exceed $ . 6. Retirement - [NOTE: One, none or more of these could apply.] 6.1 Qualified Plan - During the term of this Agreement, CHAMBER shall make such contributions as are required on behalf of EXECUTIVE to the CHAMBER Retirement Plan, which is treated as a qualified plan by the Internal Revenue Service, and the rights of EXECUTIVE under such a plan shall be governed by its terms. [NOTE: There are several forms of qualified retirement plans. In each case, the chamber should specify, by description, the plan. This may be a defined benefit pension plan, or discretionary profit-sharing plan, or some other type of plan.] 6.2 Cash or Deferred Arrangement - Section 401(k) Plan CHAMBER has a cash or deferred arrangement consistent with the requirements of Section 401(k) of the Internal Revenue Code of 1986, as amended. The terms and conditions of that plan shall govern it without reference to this Agreement. [NOTE: Limits on contributions are imposed.] 6.3 SEP - CHAMBER shall make all such payments as may be required on behalf of EXECUTIVE to a Simplified Employee Pension Plan as may be authorized and conducted by CHAMBER in accordance with applicable provisions of such plan and of the Internal Revenue Code and in accordance with such terms as may be approved by the Board of Directors of CHAMBER. [NOTE: This may be an attractive alternative for the small chamber. Consult your tax advisor.] 6.4 Deferred Compensation - CHAMBER and EXECUTIVE shall enter into a supplementary employment agreement simultaneously with the execution of this Agreement to provide for certain deferred compensation benefits for EXECUTIVE. The terms and conditions of that agreement alone shall 533578628 govern it. [NOTE: Such compensation must be deferred before it is earned. The tax advantages of "eligible" unfunded deferred compensation agreements are governed and limited under Section 457 of the Internal Revenue Code. "Ineligible" plans may also be utilized, but there must be a substantial risk of forfeiture, i.e., possible loss of all benefits, to avoid current taxation. Be sure to consult your tax advisor.] 6.5 Other Retirement Benefits - If this Agreement is terminated by the mutually agreed upon retirement of EXECUTIVE at the age of or as otherwise agreed to by the parties, CHAMBER shall provide to EXECUTIVE the following: [NOTE: This could include continued health coverage, annuity, etc., to the extent such benefits or insurance coverage are obtainable. The Age Discrimination in Employment Act bans any discrimination based on age as to such benefits. Consult your legal advisor.] 7. Expense Reimbursement - 7.1 In General - CHAMBER shall pay or reimburse EXECUTIVE for all ordinary and necessary expenses incurred by EXECUTIVE in the performance of EXECUTIVE’s duties under this Agreement and in accordance with the policies of and budget approved by CHAMBER. 7.2 Professional Chamber Dues and Expenses - CHAMBER shall pay or reimburse EXECUTIVE for appropriate professional chamber dues and fees as may be approved by the Executive Committee of CHAMBER. In addition, EXECUTIVE shall be reimbursed for all ordinary and necessary expenses incurred by EXECUTIVE in attending or otherwise participating in the programs of such organizations, within the budget approved by CHAMBER. 7.3 Spouse Expenses - The Executive Committee of CHAMBER, as a condition of EXECUTIVE’s continued employment with CHAMBER, shall periodically designate those meetings and activities for which it deems it necessary, from a business point of view, for EXECUTIVE’s spouse to attend. In all such cases, CHAMBER shall pay or reimburse all ordinary and necessary expenses incurred by EXECUTIVE’s spouse to attend such meetings and activities. [NOTE: Such expenses are generally considered taxable income to the executive, with very few exceptions.] 7.4 Automobile Entitlement - In light of the unique nature of the professional duties of EXECUTIVE, CHAMBER shall provide EXECUTIVE with an automobile lease (not to exceed $______ per month) for business use as required under this Agreement. CHAMBER shall insure or otherwise hold harmless EXECUTIVE against all liability that results or may result from the use of the automobile. EXECUTIVE shall be responsible for undertaking reasonable precautions to prevent the loss, theft or destruction of the automobile, including its garaging, the expense of which, however, shall be paid by CHAMBER. The 533578628 CHAMBER shall pay for insurance, gasoline, maintenance and operation of the vehicle. [NOTE: Nontaxable monthly parking expenses are capped by the IRS. Some chambers provide a monthly cash allowance instead. Auto leases and monthly auto allowances are generally considered taxable income to the executive unless business use is properly substantiated. Personal use invariably results in taxable income.] 7.5 Club Membership - CHAMBER shall pay the membership dues and related fees for EXECUTIVE’s membership in an appropriate business club to be used by EXECUTIVE for the ordinary and necessary business purposes of CHAMBER and to be selected by EXECUTIVE with the initial approval of the Executive Committee. [NOTE: Such expenses, including airline clubs, are generally considered taxable income to the executive, with very few exceptions.] 7.6 Relocation – CHAMBER shall pay reasonable housing, meals and travel expenses to EXECUTIVE during the transition of relocation to __________. EXECUTIVE is expected to relocate to _________ as soon as is reasonable. At such time that EXECUTIVE moves his/her family to ___________, CHAMBER shall provide a complete relocation package to include (but not limited to): house hunting trips, closing costs, sales commissions, storage of goods (if necessary), points, moving expenses and other related real estate costs. [NOTE: The tax treatment and substantiation requirements of Moving Expenses are subject to specific IRC rules and IRS regulations. See IRS Form 3903. If the intent is to “make the executive whole,” certain reimbursements (or direct payments) that are not excludable from income would have to be “grossed up” to cover the increased tax liability of the executive.] 7.7 Day Care – CHAMBER shall pay up to ________ per day/per month to defray costs of day care for EXECUTIVE’s dependents who require such care when EXECUTIVE is unavailable because of CHAMBER activities. [NOTE: Such payment will be taxable income unless pursuant to a Dependent Care Assistance Plan, almost always a part of a Flexible Benefit (or Cafeteria or §125) Plan, typically also entailing a Medical Expense Reimbursement Plan.] 8. Other Benefits - 8.1 Vacation and Leave - EXECUTIVE shall be entitled to a minimum of ____ business days of vacation per year, and such leave days as may be in accordance with the policies approved by the Board of Directors of CHAMBER. Such vacation and leave days may be taken at the discretion of EXECUTIVE in consultation with the chief elected officer of CHAMBER. Unused vacation and leave days of no more than _____ days may be carried over to the next year without the specific approval of the Board. 8.2 Tuition - CHAMBER shall pay or reimburse EXECUTIVE for annual tuition, not to exceed $ per year, for courses leading to 533578628 , which is deemed necessary by CHAMBER for EXECUTIVE to maintain EXECUTIVE’s position under this Agreement, and CHAMBER shall encourage and pay for such other professional development education for EXECUTIVE as may be approved by the Executive Committee of CHAMBER. [NOTE: The taxability and reporting rules regarding tuition reimbursement programs have been in a state of flux in recent years. Professional advice should be sought to both minimize tax consequences to the extent possible and meet all reporting requirements.] 8.3 Medical Reimbursement - To the extent not covered by insurance, CHAMBER’s Board of Directors shall adopt a nondiscriminatory medical reimbursement program in an amount of $ per year covering EXECUTIVE and such other CHAMBER employees as deemed necessary and appropriate by the Board. In order to qualify, the CHAMBER shall match $______ for each $ paid by EXECUTIVE. [NOTE: Usually funded by employees through elective contributions to a Flexible Benefit (or Cafeteria or §125) Plan.] 8.4 Medical Examination - Once each year during the term of this Agreement, EXECUTIVE shall obtain a complete medical examination, the reasonable cost of which shall be paid by CHAMBER. (The chief elected officer of CHAMBER shall be advised in writing by the physician of the continued physical ability of EXECUTIVE to perform his/her duties and such report shall be confidential.) 9. Evaluation - No later than _____________ of each year this Agreement is in effect, CHAMBER shall evaluate and assess the performance of EXECUTIVE. Such evaluation shall relate to the duties and responsibilities of EXECUTIVE under this Agreement, EXECUTIVE’s progress toward established goals as set forth in the job description attached to this Agreement as Exhibit A, and the working relationship between EXECUTIVE, the staff and the membership. The evaluation shall be done by the Executive Committee which shall meet alone without EXECUTIVE in executive session and thereafter separately with EXECUTIVE to discuss its evaluation. CHAMBER and EXECUTIVE shall conduct such meetings in accordance with procedures as may be agreed to. In the event that the performance of EXECUTIVE is deemed unsatisfactory in any respect, the Executive Committee shall describe in writing, in reasonable detail, specific instances of unsatisfactory performance. The evaluation shall include recommendations as to areas for improvement in all instances where CHAMBER deems performance to be unsatisfactory. A copy of the written evaluation shall be given to EXECUTIVE. If EXECUTIVE disagrees with such evaluation, EXECUTIVE may respond in writing to . All such writings shall be made a part of EXECUTIVE’s confidential personnel file. Upon the conclusion of the evaluation, the Executive Committee shall make recommendations as to possible changes in the compensation and benefits of EXECUTIVE for the next subsequent contract year in accordance with Section 3 of this Agreement and for mutually agreed upon goals and objectives to be included in EXECUTIVE’s job description. 10. Nondisclosure of Confidential Information - EXECUTIVE shall not during the term of this Agreement, or at any time thereafter, impart to anyone any confidential information 533578628 which EXECUTIVE may acquire in the performance of EXECUTIVE’s duties under this Agreement, except as permitted by CHAMBER or under compulsion of law. Under no circumstances shall EXECUTIVE use, directly or indirectly, any such information for his/her personal gain or profit. 11. Indemnification - CHAMBER shall indemnify, defend and hold and save EXECUTIVE, EXECUTIVE’s heirs, administrators and executors, and each of them, harmless from any and all actions and causes of action, claims, demands, liabilities, losses, damages or expenses, of whatsoever kind and nature, by a third party including judgments, interest and attorney's fees and all other reasonable costs, expenses and charges which EXECUTIVE, EXECUTIVE’s heirs, administrators and executors, or any of them shall or may at any time, or from time to time, subsequent to the date of this Agreement sustain or incur, or become subject to by reason of any claim or claims by a third party against EXECUTIVE, EXECUTIVE’s heirs, administrators or executors or any of them for any reason resulting from EXECUTIVE, EXECUTIVE’s heirs, administrators or executors, or any of them, carrying out the terms and conditions of this Agreement, except for gross negligence, willful misconduct or criminal acts or omissions on the part of EXECUTIVE, and provided further that EXECUTIVE, EXECUTIVE’s heirs, administrators, executors, or any one of them promptly notifies CHAMBER and its general counsel of adverse claims or threatened or actual lawsuits. EXECUTIVE, EXECUTIVE’s heirs, administrators or executors, as appropriate, shall provide complete cooperation to CHAMBER, its attorneys and agents in such case to the extent possible. 12. Effect of Agreement - This Agreement shall be binding upon the parties and their respective heirs, executors, administrators, successors and assigns. EXECUTIVE shall not assign any part of EXECUTIVE’s rights under this Agreement without the prior written consent of CHAMBER. In the event of a merger, sale, transfer, consolidation, or reorganization involving CHAMBER, this Agreement shall continue in full force and become an obligation of CHAMBER’s successor. 13. Amendment and Termination - 13.1 Mutual Agreement - This Agreement may be altered, amended or terminated at any time by the mutual written agreement of EXECUTIVE and CHAMBER. 13.2 Termination - This Agreement shall terminate in accordance with Section 1 of this Agreement or upon the written notice of one party to the other, provided that in the case of termination by CHAMBER there shall be formal action, at a duly called meeting, by the Board of Directors (the Executive Committee) which the chair may order as an Executive Session at which EXECUTIVE may be excluded, except as otherwise provided, by way of a resolution adopted by a majority (or two-thirds or other supermajority) of the members of the Board (the Committee) to give such notice, and the occurrence of any of the following events: 533578628 13.2.1 The bankruptcy or dissolution of CHAMBER. 13.2.2 The day after the sending of a written notice of an intention to terminate by CHAMBER to EXECUTIVE, or the ______ day after the sending of a written notice of an intention to terminate by EXECUTIVE to CHAMBER. [NOTE: The effect of this clause limits the term of the agreement to the notice period, not the full term of the agreement.] 13.2.3 The death of EXECUTIVE, except that no notice shall be required from CHAMBER. 13.2.4 The absence of EXECUTIVE by reason of illness or other incapacity or the inability of EXECUTIVE to perform his/her obligations under this Agreement for more than consecutive calendar days and upon days’ prior written notification by CHAMBER to EXECUTIVE of an intent to terminate because of such absence or inability. 13.2.5 The material breach of this Agreement, or the negligent or willful misperformance by EXECUTIVE of EXECUTIVE’s obligations under this Agreement or dishonest, fraudulent or criminal acts on the part of EXECUTIVE, provided, however, EXECUTIVE shall be given prior written notice of the charges against him/her, and the opportunity to respond, in person or in writing at the option of EXECUTIVE, to the charges before a final decision is made to terminate this Agreement. 13.3 Termination Compensation - In the event of termination by CHAMBER pursuant to Sections 13.2.1, 13.2.2 (except for termination by EXECUTIVE), [13.2.3] or 13.2.4, [or the refusal by CHAMBER to offer to retain EXECUTIVE as employee of CHAMBER upon this Agreement's termination pursuant to Section 1,] EXECUTIVE shall be paid as termination compensation: 13.3.1 An amount equal to ____ _______ salary [Generally one month’s salary for each full year EXECUTIVE has been employed by CHAMBER with a cap of a year’s full compensation]. [NOTE: This could be set number, or based on a formula. Also consider a payment related to any forfeited, i.e., non-vested, qualified retirement plan benefits.] 13.3.2 Except in the event of termination pursuant to section 13.2.3, CHAMBER shall also provide _____under Sections , , , to the extent allowed by the insurance policies provided by CHAMBER and for , 533578628 during the Severance Period. [NOTE: Executive and chamber should determine what benefits shall continue during the Severance Period.] 13.3.3 In the event of termination pursuant to Section 13.2.3, CHAMBER shall also pay to EXECUTIVE’s estate or heirs $________ plus such other benefits to which EXECUTIVE was entitled on the date of EXECUTIVE’s death. [NOTE: This may already be addressed in the life insurance provisions.] 13.3.4 In the event of termination by EXECUTIVE or pursuant to Section 13.2.5, there shall be no termination compensation except for legally vested benefits in vacation, insurance and retirement programs as provided under this Agreement or as required by law. [NOTE: There are, in addition to these, various alternatives which should be considered as to termination compensation, such as outplacement services, consulting agreement, and other benefits.] 14. Other Provisions - 14.1 Joint Effect of Agreement - Nothing in this Agreement shall be deemed to create a partnership or agency relationship between CHAMBER and EXECUTIVE to make either jointly liable with the other for any obligation arising out of the activities and services contemplated by this Agreement. 14.2 Section Headings - Section headings and numbers have been inserted for the convenience of reference only, and if there is any conflict between any such headings or numbers and the text of this Agreement, the text shall control. 14.3 Counterparts - This Agreement may be executed in one or more counterparts, each of which shall be considered an original, and all of which shall be considered one and the same instrument. 14.4 Waiver - Waiver by either party of any term or condition of this Agreement or of any breach shall not constitute a waiver of any other term or condition or breach of this Agreement. 14.5 Bond - CHAMBER may, at its option and expense, obtain a faithful performance and fidelity bond on EXECUTIVE. 14.6 Execution and Applicable Law - This Agreement has been executed in (City) , (State) and shall be governed in accordance with the laws of the State (Commonwealth) of in every respect. 533578628 14.7 Notices - Any notice or communication permitted or required by this Agreement shall be in writing and shall become effective upon personal service, or service by wire transmission which has been acknowledged by the other party as being received, or two days after its mailing by certified mail, return receipt requested, postage prepaid addressed: 14.7.1 If to CHAMBER, to the then chief elected officer of CHAMBER at his or her last recorded address on the records of CHAMBER, with a copy to the general counsel of CHAMBER. 14.7.2 If to EXECUTIVE, to: _______________________________ _______________________________ _______________________________ 14.8 Entire Agreement - This Agreement, along with Exhibit A (and the supplementary employment agreement providing for deferred compensation and ______________), contains all of the terms agreed upon by the parties with respect to the subject matter of this Agreement and supersedes all other agreements, arrangements and communications between the parties concerning such subject matter, whether oral or written. IN WITNESS WHEREOF, the parties to this Agreement have signed it on the day and date first written above. CHAMBER EXECUTIVE By:_____________________________ ___________________________________ Its: _____________________________ *************** OTHER OPTIONAL CLAUSES 1. 533578628 Employment Term and Renewal 1.1 Initial Term - CHAMBER hires and retains EXECUTIVE for the term beginning , 200 through , 200 as President (Executive Vice President, Executive Director, etc.) of CHAMBER. 1.2 Renewal - If CHAMBER does not notify EXECUTIVE in writing before , 200__ that this Agreement is not to be renewed, it shall be deemed that CHAMBER has renewed this Agreement for an additional term of ______ year(s) beginning through . EXECUTIVE, by certified mail to the then chief elected officer of CHAMBER, shall remind him or her of the existence of this notification requirement before _____________, 200 . Failure to serve such notice by EXECUTIVE shall be deemed as a waiver by EXECUTIVE of the automatic renewal provisions provided in this Section. ********** 3. Compensation and Cost of Living Increase - EXECUTIVE shall be paid a minimum salary of $ per year in equal installments on the and day of each month. On each subsequent , the annual compensation of EXECUTIVE shall be adjusted upward by a percentage equal to the upward percentage change rounded to the nearest percent in the City of , (or such other location in the event the office of CHAMBER is relocated) All Item Consumer Price Index for the twelve-month period ending _________in the year in question as compared to the base index as of . If there is no upward or if there is a downward change, EXECUTIVE’s compensation shall remain the same for the next twelve-month period in question. This adjustment shall not be considered a merit increase. In addition, this compensation may be adjusted upward in accordance with the action of CHAMBER as provided for in this Agreement. 533578628