Mark Shareholder Agreement Made Easy

Signatory shareholder agreement template

talking today I absolutely want to make sure you have those reflexes shareholders agreements ridiculously boring and it's obviously it's hyperbole when I say ever exciting it's not ever exciting it's complete bore but it's it's so important and I'll tell you why I do litigation on very specific circumstances mostly in a commercial setting now I all in will advise all my startups to have a shareholder agreement last week I got a call and it is a Corp it's a company that has a restaurant two guys they got the business two years ago they got in each of them injected 100 grand things were hard they hustled they worked a hundred hours a week plus and they finally got the business up to a point where it's a hold up its profitable they're making money things are happening they're getting interest they're getting interest for franchisor franchisees who want to take that model and go elsewhere there's a problem one of the owners has since decided he wants to rediscover his homeland in Egypt he wants to go back home he wants to travel he has business interests in the in Egypt so he's not around he's gone for months at a time so the shareholder calls me and he goes what the hell he told me he was gonna be there half the time he's never around he doesn't want to come he doesn't return my calls and when he comes he's starting fights with my with my employees the first question I ask him where's the shareholder agreement oh you know we never got around to signing it and we have a draft that my lawyer sent me back then but you know things got busy it's not like okay okay this is gonna be fun so I looked through all the other documents and there's nothing there is no saving grace for these guys so what do I do as an attorney I have to write the the defaulting shareholder nasty letters and I have to tell them things like you're not respecting your obligation and you're going to bring this company down to two to it you know to the to the abyss if you don't get your together and come back from Egypt and respect your obligations oh and by the way stop coming and bothering all the employees we don't want to see you so that's the lawyer that's the letter I sent him but the biggest problem is that there will be no easy exit strategy or there is no way for these two people to separate easily they're stuck together they are married and they will live happily ever after whether they like it or not whether I get in the picture or not the only one who will win is the lawyer who will probably make a lot of money from each of them fighting for a very long time so if there was a shareholder agreement there could have been something like a shotgun clause in which one of the guys could have attributed a value on his shares and forced his partner to buy him out for example even worse what happens if one of these two bozos dies what happens well the estate if there's any value there they've basically just given their estates a reason to fight so one estate the estate is gonna say no the shares are worth a million and the guy who is alive is gonna say are you crazy they're probably worth 50 grand and then so so I still have a client in the estate they're gonna continue the fight so if there's a shareholder agreement then the guy dies I look at Clause 9 and I say okay if the guy dies hears we here's how we set the value and here's how the here's how the parties break up if there's a shareholder agreement with a nice shotgun Clause I know that there's a mechanism to set the value so the lawyer has to apply does shareholder agreement not write him stupid letters about him not coming to the restaurant III have material so this is why the ever exciting shareholder agreement that will cost you measly money today is essential going forward because people break up people have different agendas people die and people go to Egypt to rediscover their homeland so that's that's this this is the take-home message so Dooney if you go to the next slide if anyone from Egypt here it's beautiful there bye so these are Greece owns all of these agreements are in our to avoid these legal gray zones I don't like legal gray zones I like them from my bottom line because my attorneys make a lot of money on them but they're not good for you they are not good for you legal gray zones Ants are where you find yourself if there's no shareholder agreement company goes bankrupt somebody wants to leave the company if somebody commits fraud if somebody passes away so yes we have a civil code it comes from Napoleon and France we've readapted it over the centuries but the law does not address these very specific questions we don't know what happens when someone flow when somebody commits fraud yes there's a criminal code but it doesn't give you a blueprint about what the effect is on the shares they own and the value of the company nobody knows except for guys like me to make an argument about what happens if there's no shareholder agreement we go into the abyss and we fall in the legal gray zone you don't want to be in the legal gray zone so the shareholder agreement will prevent you from getting there