Termination and Redemption Agreement

Summary

This template termination and redemption agreement between a privately held company and a terminating employee sets forth terms regarding severance, the company's repurchase of the employee's company stock holdings, and the employee's general release of claims against the company. This template includes practical guidance, drafting notes, and alternate and optional clauses. Termination and redemption agreements protect the remaining shareholders controlling a privately held company from issues that may arise from unknown transferees and minimize the potential for disputes between the company and the terminating employee as well as among the remaining shareholders caused by the uncertainty of the employee-shareholder’s termination. The company should periodically review these agreements to conform the terms and conditions appropriately reflect the changing needs of the company and its existing shareholders. For an example of a shareholders' agreement (as referenced in this template), see Shareholders' Agreement (NY Corporation). For information on drafting and negotiating separation agreements with executives, see Executive Separation Agreement Drafting, Executive Separation Agreement Negotiation (Pro-employer), and Executive Separation Agreement Negotiation (Pro-executive). For state-specific information on general releases, see the practice notes identified under Special Release Issues" in Investigations, Discipline, and Terminations State Practice Notes Chart.