SAMPLE LETTER OF AGREEMENT (FOR RETENTION PAY)This Sample Letter of Agreement (free to save and download) covers a company being sold that pays an employee to stay through the sale, and explains the sale of the company, the target, the acquirer, retention pay, notification, severance, and release for a sample letter of agreement. |
[DATE: _____________]
[_____________]
Re: Letter of Agreement
Dear [_____________]:
As you are aware, [_____________] ("Target") recently announced that it has entered into an agreement to be acquired by [_____________] ("Acquirer"). The press release issued on [_____________] announcing the Stock Purchase Agreement, which outlines the general terms and time table of the proposed transaction, is attached for your reference. The anticipated date for completion of the tender offer for Acquirer's acquisition of a majority of the shares of Target is [_____________].
The purpose of this letter is to offer you an opportunity to participate in a "Retention Pay" program designed to provide both you and Target an understanding of your employment status during this period. The Company relies on you to do the best job possible. We would like for you to maintain that focus. Therefore, a "Retention Pay" program is being offered to you if you agree to remain in your current position for a period up to and including [_____________] days past the close of the tender offer. During the [_____________] period immediately following the close of the tender offer, the organization of the continuing company will be determined. At the completion of that process you will be informed of your future with the new organization (the "Notification Date").
Should you be notified at that time that your services are no longer required, or that your services are only required through a specific period (and you then work through that period), you will be paid a "Retention Pay" payment at the time of your separation. This payment will be in addition to those severance benefits you might also be eligible to receive under Company policy.
If you are notified that your employment will continue under similar circumstances as your current employment, and you are involuntarily terminated without cause within [_____________] days of the Notification Date or your job location is changed or base salary is reduced during this period, you will receive the full "Retention Pay" payment. This payment will also be in addition to those severance benefits which you are eligible to receive under the Target policy. If you terminate for other reasons prior to the end of that period, however, you will not receive the "Retention Pay" payment.
If you have not been given a termination date and continue to work for at least [_____________] days beyond the Notification Date, you will not be eligible to receive the "Retention Pay" amount.
The "Retention Pay" payment amount is equivalent to [_____________] months of your current base pay.
For purposes of this letter, "cause" means your conviction of a felony; negligent failure to carry out your duties with the Company after you have been provided with notice of the willful failure and have been given an opportunity to cure it; insubordination; violation of company rule or policy; misconduct, job abandonment; gross negligence or resignation by employee.
Any "Retention Pay" payments will be subject to applicable withholdings.
Please be advised that this document does not constitute a formal employment contract or otherwise alter the nature of the at-will employment relationship between you and Target. If you agree to work through the transition period and then work through that period, and are terminated at the end of the defined period for reasons other than cause, the Company will draft an "Agreement for Severance Benefits and For Release, Waiver and Nondisclosure" which will be presented to you at the time of your separation from the Company. Execution of this Severance Agreement is a required condition for you to receive the "Retention Pay" payment.
I thank you for all your past efforts and look forward to you giving the same effort during this transition period.
Sincerely,
[_____________]
AGREED:
By: [_____________]
Name: [_____________]
Title: [_____________]
[_____________]
Re: Letter of Agreement
Dear [_____________]:
As you are aware, [_____________] ("Target") recently announced that it has entered into an agreement to be acquired by [_____________] ("Acquirer"). The press release issued on [_____________] announcing the Stock Purchase Agreement, which outlines the general terms and time table of the proposed transaction, is attached for your reference. The anticipated date for completion of the tender offer for Acquirer's acquisition of a majority of the shares of Target is [_____________].
The purpose of this letter is to offer you an opportunity to participate in a "Retention Pay" program designed to provide both you and Target an understanding of your employment status during this period. The Company relies on you to do the best job possible. We would like for you to maintain that focus. Therefore, a "Retention Pay" program is being offered to you if you agree to remain in your current position for a period up to and including [_____________] days past the close of the tender offer. During the [_____________] period immediately following the close of the tender offer, the organization of the continuing company will be determined. At the completion of that process you will be informed of your future with the new organization (the "Notification Date").
Should you be notified at that time that your services are no longer required, or that your services are only required through a specific period (and you then work through that period), you will be paid a "Retention Pay" payment at the time of your separation. This payment will be in addition to those severance benefits you might also be eligible to receive under Company policy.
If you are notified that your employment will continue under similar circumstances as your current employment, and you are involuntarily terminated without cause within [_____________] days of the Notification Date or your job location is changed or base salary is reduced during this period, you will receive the full "Retention Pay" payment. This payment will also be in addition to those severance benefits which you are eligible to receive under the Target policy. If you terminate for other reasons prior to the end of that period, however, you will not receive the "Retention Pay" payment.
If you have not been given a termination date and continue to work for at least [_____________] days beyond the Notification Date, you will not be eligible to receive the "Retention Pay" amount.
The "Retention Pay" payment amount is equivalent to [_____________] months of your current base pay.
For purposes of this letter, "cause" means your conviction of a felony; negligent failure to carry out your duties with the Company after you have been provided with notice of the willful failure and have been given an opportunity to cure it; insubordination; violation of company rule or policy; misconduct, job abandonment; gross negligence or resignation by employee.
Any "Retention Pay" payments will be subject to applicable withholdings.
Please be advised that this document does not constitute a formal employment contract or otherwise alter the nature of the at-will employment relationship between you and Target. If you agree to work through the transition period and then work through that period, and are terminated at the end of the defined period for reasons other than cause, the Company will draft an "Agreement for Severance Benefits and For Release, Waiver and Nondisclosure" which will be presented to you at the time of your separation from the Company. Execution of this Severance Agreement is a required condition for you to receive the "Retention Pay" payment.
I thank you for all your past efforts and look forward to you giving the same effort during this transition period.
Sincerely,
[_____________]
AGREED:
By: [_____________]
Name: [_____________]
Title: [_____________]