Employee Retention Agreements

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An Employee Retention Agreement is really a legal contract applied for by a boss and a key employee whose services this company desires to retain. When employees understand that their company may very well be acquired, they realize that their employment security can be in danger. In these situations, companies who would like to ensure these employees’ continuing loyalty and commitment sometimes think it is inside the best interests of this company and its stockholders to deliver the employee having an incentive to remain his or her employment and also to motivate the worker to maximize the value of the organization upon any change of control.

Employee Retention Agreements generally give a bonus structure and severance model for key employees, and will include significant severance pay, acceleration of share, or some other benefits this company deems important to retain the staff member. Drafters of those agreements should likewise pay attention to include, if applicable, these provisions:

1. TERM OF AGREEMENT. The agreement should likely terminate upon the quicker of: (a) the termination of Employee’s employment for any excuse prior to a change of control, or (b) the date that obligations in the parties hereto when it comes to this Agreement are already satisfied. This provision needs to be drafted accordingly.

2. AT-WILL EMPLOYMENT. If applicable, the organization and the staff member should both acknowledge the Employee’s employment is and shall stay at-will, as defined under applicable law. If the Employee’s employment terminates for any excuse prior to a change of control, the Employee shall stop entitled to the pros provided by this Agreement, or another benefit unless otherwise obtainable in accordance together with the Company’s established employee plans and practices or pursuant along with other agreements while using Company.

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