First, way to go! You've chosen to be vulnerable, and that is a great first step.
Second, get a therapist. It may seem expensive, and not helpful at first, but as I'm sure you already felt in writing this post, just talking about your thoughts and issues really does help.
Third, it's NEVER too late. I'm 42 and learning and growing daily. I've had to change a lot in the last decade to remain 1) relevant, and 2) in the loop.
I've had to learn to network again, because my original network of friends and colleagues dried up. It's possible, and after you start with a therapist, it'll be easier and more rewarding than ever before.
Finally, and I can't stress this enough, get out and do service for others. Soup kitchens, shoveling snow, cutting grass, whatever you can do. It will give you an immediate jolt of worth, and make the world a better place for all involved.
I wish you luck friend. If you need more talking, let me know utahcon [at] utahcon dot com
To me this comes down to legal. If the person has been documented as a problem, corrective actions have been documented, and whatever you have as an HR dept says it's ok to fire the guy, fire him. If you feel guilty, then offer him a portion of his potential vesting, and explain that he was shit, but you don't want to leave him empty handed.
Is the timing great? No. That's why it must be well documented the behavior your penalizing. He will almost certainly come back to sue you for wrongful termination if there is no documentation (and you have any value to your shares).