The Shareholder Termination Agreement is a critical document used when a shareholder exits a corporation in Canada, whether through voluntary departure, retirement, or negotiated separation. This agreement is essential for privately-held companies operating under Canadian federal or provincial jurisdiction, where share transfers need to be carefully documented and executed. The document must comply with the Canada Business Corporations Act (CBCA) or provincial equivalents, securities regulations, and tax laws. It typically becomes necessary when a shareholder wishes to sell their shares, is required to sell under a shareholders' agreement, or when the company exercises a buyout option. The agreement comprehensively addresses share valuation, payment terms, tax considerations, confidentiality obligations, and releases of claims. Additional provisions may cover employment termination, board resignation, non-compete clauses, and transition arrangements. The document serves to protect all parties' interests and provide clear documentation for corporate records and regulatory compliance.
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1. Parties: Identification of all parties to the agreement including the departing shareholder, company, and remaining shareholders
2. Background: Context of the shareholding and reasons for termination
3. Definitions: Definitions of key terms used throughout the agreement
4. Share Ownership: Details of shares owned by the departing shareholder
5. Purchase Price: Agreed value of shares and calculation method
6. Payment Terms: Structure and timing of payment for shares
7. Closing Conditions: Conditions that must be met before the termination becomes effective
8. Representations and Warranties: Statements of fact by all parties regarding their capacity, authority, and share ownership
9. Release of Claims: Mutual release of claims between parties
10. Confidentiality: Ongoing obligations regarding confidential information
11. Tax Matters: Allocation of tax liabilities and responsibilities
12. General Provisions: Standard boilerplate clauses including governing law, notices, and amendments
13. Execution: Signature blocks and execution requirements
1. Employment Termination: Required if the shareholder is also an employee, covering termination of employment relationship
2. Non-Compete and Non-Solicitation: Restrictions on future competitive activities and client/employee solicitation
3. Board Resignation: Required if shareholder holds director or officer positions
4. Intellectual Property Rights: Required if shareholder has created or owns IP relevant to the company
5. Ongoing Obligations: Any continuing duties or responsibilities after termination
6. Return of Company Property: List of items to be returned if shareholder had operational role
7. Indemnification: Specific indemnification provisions beyond standard releases
8. Transition Services: If shareholder needs to provide transition assistance
9. Earn-out Provisions: If part of purchase price is tied to future performance
1. Schedule A - Share Certificate Details: List of share certificates, certificate numbers, and share classes
2. Schedule B - Purchase Price Calculation: Detailed methodology and calculations for share valuation
3. Schedule C - Payment Schedule: If payment is in installments, detailed payment timeline
4. Schedule D - Company Assets Register: List of company assets in shareholder's possession to be returned
5. Schedule E - Resignation Letters: Form of resignation letters from various positions
6. Appendix 1 - Share Transfer Forms: Required legal forms for share transfer
7. Appendix 2 - Tax Elections: Required tax forms and elections
8. Appendix 3 - Release Forms: Detailed release and waiver forms
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