Employee Stock Redemption Agreement

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This Employee Shareholder Redemption Agreement is used when a shareholder/employee desires to severe their relationship with a corporation and redeem all shares.

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This Employee Shareholder Redemption Agreement sets forth that an employee-shareholder (or director-shareholder) desires to sever his/her relationship with the corporation and that the corporation will redeem all shares owned by the shareholder. This agreement sets forth the number of shares owned by shareholder, redemption price for the shares and how payment will be made to the shareholder. It also includes the redemption price for the shares, and that shareholder's salary may be adjusted and date and location of the transaction closing.

This Employee Shareholder Redemption Agreement contains the following provisions:
  • Parties: Spells out the name of the corporation and the employee shareholder who desires to redeem his or her shares;
  • Recitals: Sets forth the number of shares owned by the shareholder, that corporation desires to redeem the shares and that all shareholders consented to the stock redemption at an annual meeting of shareholders;
  • Redemption Price: Exact redemption price which represents a percentage of the net book value and net book income of the corporation for a specific month (copy of balance sheet will be incorporated as an exhibit to this agreement);
  • Payment to Shareholder: Sets forth that shareholder will be paid by the assignment and transfer of certain receivables and any balance will be paid in cash. Optional provisions about adjustment of price or salary are included in this agreement;
  • Signature: The corporation and shareholder must sign this agreement.

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This attorney-prepared packet contains:
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  2. Instructions and Checklist
  3. Employee Shareholder Redemption Agreement
State Law Compliance: This form complies with the laws of all states
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Employee Shareholder
Redemption Agreement
 

 

 
Agreement made ______, between ______, a corporation organized and existing under the laws of ______ with its principal place of business at ______, ______, ______ County, ______, referred to as the corporation, and ______, of ______, ______, ______ County, ______, referred to as the shareholder.
 
Recitals
 
   A.   The corporation now has issued and outstanding ______ shares of fully paid and nonassessable common stock.
 
   B.   The shareholder is the owner of ______ shares of common stock of the corporation and these shares represent the shareholder's entire share interest in the corporation.
 
   C.   The corporation desires to redeem all of these shares on the terms and conditions set forth below.
 
   D.   The shareholder desires to sever his or her relationship with the corporation as shareholder and as an employee, officer and/or director of the corporation.
 
   E.   The shareholder is willing that these shares be redeemed on the terms and conditions set forth below.
 
   F.   The shareholder desires that the redemption shall be accorded capital gains, rather than ordinary income treatment, under the rules imposed by the Internal Revenue Code, as implemented by the regulations adopted pursuant to those rules.
 
   G.   It is necessary that all the shares held by the shareholder be redeemed, and that certain other conditions be met in order for the shareholder to be afforded the desired income tax treatment.
 
   H.   All of the shareholders of the corporation have duly consented to the redemption at an adjourned annual meeting of shareholders.
 
   I.   The parties to this agreement desire to establish their mutual rights and obligations in the premises.
 
NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this agreement, the parties agree as follows:
 
1.   Redemption Price
 
Subject to and in accordance with the terms and conditions of this agreement, the shareholder agrees to sell to the corporation and the corporation agrees to buy from the shareholder the shares of the corporation's common stock now owned by shareholder for a redemption price of $______ to be paid as provided below, subject, however, to adjustment in accordance with the provisions of Section 3.  The price represents (a)______% of the net book value of the corporation's property and assets as reflected by the corporation's balance sheet at the close of business on ______, as prepared and certified by ______, independent certified public accountants, plus (b) ______% of the net income of the corporation for the month of ______.  A copy of the balance sheet is attached to this agreement, marked Exhibit ______, and incorporated by reference.
 
2.   Payment To Shareholder
 
The corporation shall pay the redemption price to the shareholder in the following manner:
 
(a)   The sum of $______ by assigning and transferring to the shareholder without recourse certain receivables of the corporation in the aggregate face amount of $______ and identified and described by job locations on the corporation's records as follows:  ______.
 
(b)   The balance of $______ by payment in cash.
 
[3.   Adjustment of Price  Optional]
 
On the completion of the ______ job at ______, ______, ______ County, ______, referred to as the ______ job, the net profit realized from the job by the corporation may be more or less than the amount of the profit reflected on the corporation's books on ______, namely $______.  Accordingly, the redemption price shall be subject to adjustment on the completion of the ______ job either by further payment to the shareholder by the corporation of an amount equal to ______% of any additional profit or by reimbursement by the shareholder to the corporation of an amount equal to ______% of any reduction in the profit, as the case may be.  The shareholder shall continue to supervise the ______ job until its completion, shall make such trips to ______ and perform such services as may be necessary for the supervision of the job, all at the shareholder's expense without charge to the corporation, and shall be furnished by the corporation with all file records, and papers required in connection with the supervision of the job.
 
[4.   Adjustment of Salary  Optional]
 
Since ______, the shareholder has devoted part of their time to another business but has received their regular salary and expense allowance from the corporation, subject to subsequent adjustment by the parties.  For the purpose of the adjustment the shareholder shall pay the corporation and the corporation shall accept a cash refund in the amount of $______ in full payment, satisfaction, and discharge of all claims or demands of the corporation against the shareholder for overpayment of salary or expense allowance to them.
 
5.   Closing
 
The closing under this agreement shall take place at ______, on ______, or any other time or date as may be mutually fixed by the parties.  The place of closing shall be the office of the corporation at ______, ______, ______, ______, or any other place as may be mutually agreed on.  At the closing, (a) the corporation shall execute and deliver to the shareholder the assignments, instruments, and documents necessary to transfer to the shareholder all of the receivables, referred to in Section 2, above, and shall pay to the shareholder by check the sum of $______; and (b) the shareholder shall deliver to the corporation certificates for their ______ shares, duly endorsed for transfer, shall tender to the corporation their written resignation as a director, officer, and employee of the corporation, shall surrender to the corporation any corporationowned items as may still be in their possession such as credit cards, keys, and other paraphernalia, and shall pay to the corporation by check the refund of $______ referred to in Section 4, above.
 
6.   Further Acts
 
After the closing, each party shall on the reasonable request of the other party execute and deliver in proper form any instruments and documents and perform any acts necessary or desirable for perfecting in the other party title to all items intended to be transferred under this agreement and putting that party in actual possession of the items.
 
7.   Documents
 
The corporation shall retain and make available to the shareholder at the shareholder's request any books, records, files, drawings, papers, and documents they may require for the purpose of collecting the receivables referred to in Section 2, above.
 
8.   Modification and Termination
 
This agreement may not be modified or terminated orally and no modification, termination, or attempted waiver shall be valid unless in writing signed by the party against whom the same is sought to be enforced.
 
9.   Binding Effect
 
The provisions of this agreement shall be binding on, inure to the benefit of, and apply to the respective heirs, executors, administrators, successors, and assigns of the parties.
 
Executed by the undersigned at ______ on ______.
 
CORPORATION:
 
[Signature of Company]
[Notary for Company]
 
SHAREHOLDER:
 
*{{[Signature of Shareholders]
[Notary for Shareholders]}}*
 
 
 
Number of Pages7
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#43634
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.
 
 
Employee Shareholder
Redemption Agreement
 

 

 
Agreement made ______, between ______, a corporation organized and existing under the laws of ______ with its principal place of business at ______, ______, ______ County, ______, referred to as the corporation, and ______, of ______, ______, ______ County, ______, referred to as the shareholder.
 
Recitals
 
   A.   The corporation now has issued and outstanding ______ shares of fully paid and nonassessable common stock.
 
   B.   The shareholder is the owner of ______ shares of common stock of the corporation and these shares represent the shareholder's entire share interest in the corporation.
 
   C.   The corporation desires to redeem all of these shares on the terms and conditions set forth below.
 
   D.   The shareholder desires to sever his or her relationship with the corporation as shareholder and as an employee, officer and/or director of the corporation.
 
   E.   The shareholder is willing that these shares be redeemed on the terms and conditions set forth below.
 
   F.   The shareholder desires that the redemption shall be accorded capital gains, rather than ordinary income treatment, under the rules imposed by the Internal Revenue Code, as implemented by the regulations adopted pursuant to those rules.
 
   G.   It is necessary that all the shares held by the shareholder be redeemed, and that certain other conditions be met in order for the shareholder to be afforded the desired income tax treatment.
 
   H.   All of the shareholders of the corporation have duly consented to the redemption at an adjourned annual meeting of shareholders.
 
   I.   The parties to this agreement desire to establish their mutual rights and obligations in the premises.
 
NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this agreement, the parties agree as follows:
 
1.   Redemption Price
 
Subject to and in accordance with the terms and conditions of this agreement, the shareholder agrees to sell to the corporation and the corporation agrees to buy from the shareholder the shares of the corporation's common stock now owned by shareholder for a redemption price of $______ to be paid as provided below, subject, however, to adjustment in accordance with the provisions of Section 3.  The price represents (a)______% of the net book value of the corporation's property and assets as reflected by the corporation's balance sheet at the close of business on ______, as prepared and certified by ______, independent certified public accountants, plus (b) ______% of the net income of the corporation for the month of ______.  A copy of the balance sheet is attached to this agreement, marked Exhibit ______, and incorporated by reference.
 
2.   Payment To Shareholder
 
The corporation shall pay the redemption price to the shareholder in the following manner:
 
(a)   The sum of $______ by assigning and transferring to the shareholder without recourse certain receivables of the corporation in the aggregate face amount of $______ and identified and described by job locations on the corporation's records as follows:  ______.
 
(b)   The balance of $______ by payment in cash.
 
[3.   Adjustment of Price  Optional]
 
On the completion of the ______ job at ______, ______, ______ County, ______, referred to as the ______ job, the net profit realized from the job by the corporation may be more or less than the amount of the profit reflected on the corporation's books on ______, namely $______.  Accordingly, the redemption price shall be subject to adjustment on the completion of the ______ job either by further payment to the shareholder by the corporation of an amount equal to ______% of any additional profit or by reimbursement by the shareholder to the corporation of an amount equal to ______% of any reduction in the profit, as the case may be.  The shareholder shall continue to supervise the ______ job until its completion, shall make such trips to ______ and perform such services as may be necessary for the supervision of the job, all at the shareholder's expense without charge to the corporation, and shall be furnished by the corporation with all file records, and papers required in connection with the supervision of the job.
 
[4.   Adjustment of Salary  Optional]
 
Since ______, the shareholder has devoted part of their time to another business but has received their regular salary and expense allowance from the corporation, subject to subsequent adjustment by the parties.  For the purpose of the adjustment the shareholder shall pay the corporation and the corporation shall accept a cash refund in the amount of $______ in full payment, satisfaction, and discharge of all claims or demands of the corporation against the shareholder for overpayment of salary or expense allowance to them.
 
5.   Closing
 
The closing under this agreement shall take place at ______, on ______, or any other time or date as may be mutually fixed by the parties.  The place of closing shall be the office of the corporation at ______, ______, ______, ______, or any other place as may be mutually agreed on.  At the closing, (a) the corporation shall execute and deliver to the shareholder the assignments, instruments, and documents necessary to transfer to the shareholder all of the receivables, referred to in Section 2, above, and shall pay to the shareholder by check the sum of $______; and (b) the shareholder shall deliver to the corporation certificates for their ______ shares, duly endorsed for transfer, shall tender to the corporation their written resignation as a director, officer, and employee of the corporation, shall surrender to the corporation any corporationowned items as may still be in their possession such as credit cards, keys, and other paraphernalia, and shall pay to the corporation by check the refund of $______ referred to in Section 4, above.
 
6.   Further Acts
 
After the closing, each party shall on the reasonable request of the other party execute and deliver in proper form any instruments and documents and perform any acts necessary or desirable for perfecting in the other party title to all items intended to be transferred under this agreement and putting that party in actual possession of the items.
 
7.   Documents
 
The corporation shall retain and make available to the shareholder at the shareholder's request any books, records, files, drawings, papers, and documents they may require for the purpose of collecting the receivables referred to in Section 2, above.
 
8.   Modification and Termination
 
This agreement may not be modified or terminated orally and no modification, termination, or attempted waiver shall be valid unless in writing signed by the party against whom the same is sought to be enforced.
 
9.   Binding Effect
 
The provisions of this agreement shall be binding on, inure to the benefit of, and apply to the respective heirs, executors, administrators, successors, and assigns of the parties.
 
Executed by the undersigned at ______ on ______.
 
CORPORATION:
 
[Signature of Company]
[Notary for Company]
 
SHAREHOLDER:
 
*{{[Signature of Shareholders]
[Notary for Shareholders]}}*
 
 
 

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