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What is a removal or termination for cause?
What is a removal or termination for cause?

A removal or termination for cause takes place when a worker is removed or terminated by the company due to a valid and satisfactory reason such as due to dishonesty, negligence, incompetence or misconduct. By contrast, a termination without cause is one that takes place for no particular reason at all and which may still be lawful and valid depending on the terms of the agreement.

The definition of cause is important in determining whether a removal or termination for cause is possible. In the Upstock RSU Equity Plan Agreement, for example, cause is deemed to exist when damage occurs by reason of certain acts or omissions of the equity plan participant, namely:

(i) the Participant’s theft, dishonesty, willful misconduct, breach of fiduciary duty for personal profit, or falsification of any Participating Company documents or records;

(ii) the Participant’s failure to abide by a Participating Company’s code of conduct or other policies (including, without limitation, policies relating to confidentiality and reasonable workplace conduct);

(iii) the Participant’s unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of a Participating Company (including, without limitation, the Participant’s improper use or disclosure of a Participating Company’s confidential or proprietary information);

(iv) any intentional act by the Participant which has a detrimental effect on a Participating Company’s reputation or business;

(v) the Participant’s repeated failure or inability to perform any reasonable assigned duties after written notice from a Participating Company of, and a reasonable opportunity to cure, such failure or inability;

(vi) any material breach by the Participant of any employment or service agreement between the Participant and a Participating Company, which breach is not cured pursuant to the terms of such agreement;

(vii) the Participant’s conviction (including any plea of guilty or nolo contendere) of a felony involving fraud, dishonesty, misappropriation, which impairs the Participant’s ability to perform his or her duties at the Participating Company; or
(viii) the Participant’s negligence willful or otherwise in the course of their duties which causes material damage to the Company.

Important Disclaimer: This material has been prepared for informational or education purposes only. The discussions or information contained herein is based on sources reasonably believed to be reliable but which has not been independently verified by an independent tax or legal professional. Thus, it is not intended to provide, and should not be relied upon for tax, investment, business and/or legal advice. Please consult with your own tax or investment adviser and legal counsel regarding this subject matter especially with respect to the relevance or accuracy of any discussion or information contained in this material under the applicable laws, rules and regulations in your jurisdiction.

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