Fill and Sign the Closely Held Corporation Agreement Form

Buy-Sell Agreement between Shareholders of Closely Held Corporation Agreement made this _______________ (date) , between __________________ (Name of Corporation) , a corporation organized and existing under the laws of _____________________ (name of state) , with its principal office located at ________ ______________________________________________________________________ (street address, city, state, zip code) , referred to herein as Corporation ; ________________________ (Name of First Shareholder) , of __________________ ____________________________________________________ (street address, city, state, zip code) , referred to herein as First Shareholder; _______________________ (Name of Second Shareholder) , of ________________________________________ _______________________________ (street address, city, state, zip code) , referred to herein as Second Shareholder ; and _____________________ (Name of Third Shareholder) , of ________________________________________________________ _________________ (street address, city, state, zip code) , referred to herein as Third Shareholder . Whereas, Corporation is authorized to issue ___________ (number) shares of common stock, with a $____________ par value per share. ____________ (Number) of shares of common stock are issued, outstanding, and are owned by Shareholders as follows: ___________________________ ________________ (Name of First Shareholder) (Number of Shares) ___________________________ ________________ (Name of Second Shareholder) (Number of Shares) ___________________________ _________________ (Name of Third Shareholder) (Number of Shares) Whereas, the parties deem it in their best interest, and in the best interest of the Corporation, to provide some restrictions on the transfer, purchase, and ownership of the stock of the Corporation; Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Definitions: The following definitions apply to this Agreement: A. Sales price means the greater of the agreed value per share or the book value per share of stock. B. Agreed value means $____________ per share of stock. The agreed value may change periodically, providing that all shareholders agree to the change in writing using the form set forth in Exhibit A , which is attached to this Agreement and incorporated by this reference. C. Book value means the net worth of Corporation disclosed by the balance sheet of Corporation, prepared as of the fiscal quarter immediately preceding the date of sale by Corporation's accountant in accordance with generally accepted accounting principles. Book value shall include the cash surrender value, though not the proceeds, of any Corporation-owned insurance policies on the life of a shareholder of Corporation. D. Closing means the date of purchase and sale of stock pursuant to this Agreement. E. Sale date means the date triggering a purchase and sale under this Agreement. 2. Issuance and Transfer of Stock All stock owned currently or acquired after execution of this Agreement shall be issued, held, and transferred pursuant to the terms of this Agreement. Shareholders agree not to dispose of or transfer any stock owned now or in the future except as provided in this Agreement. Any disposal or transfer of stock in violation of this Agreement is ineffective. 3. Stock Certificate Legend Stock certificates for stock issued by Corporation to shareholders must contain the following legend: The shares of stock represented by this certificate are held pursuant to the provisions of a Shareholders' Agreement executed on ________________ (date) . All transfers of ___________________________ (Name of Corporation) stock are subject to the terms of such Shareholders' Agreement. A copy of the Shareholders' Agreement is on file in the office of the Secretary of the Corporation. 4. Transfer of Stock during Life of Shareholder A. A shareholder shall give written notice to Corporation and to remaining shareholders within _____ days of receiving a third party's bona fide written offer, which the shareholder plans to accept, to purchase any portion of the shareholder's stock. B. Remaining shareholders have the right to purchase the stock for which the offer was made in proportion to the number of shares then owned by remaining shareholders. Remaining shareholders may avail themselves of this right by giving written notice to the selling shareholder of their election to buy within ______ days of receiving notice of intent to sell. If any shareholder fails to purchase such shareholder's proportionate shares of offered stock, remaining shareholders who have purchased shares shall have the right to proportionately purchase the unpurchased stock by providing notice of that election to the selling shareholder. C. If all offered stock is not purchased pursuant to Paragraph B, Corporation shall have the right to purchase all or part of the remaining offered stock. Shareholders and Corporation may take any action required to enable Corporation to purchase any portion of a shareholder's stock under the terms of this Agreement, including creation of a surplus. 1. Corporation may avail itself of the right to purchase offered stock by giving notice of that election to the selling shareholder within ______ days of receipt of the notice given pursuant to Paragraph A of this Section 4 . 2. Purchases and sales pursuant to this Paragraph C shall be at the prices and terms set forth in the original offer. In a sale of stock by a shareholder to Corporation, the sale price shall increase or decrease by an amount equal to any indebtedness owed seller by Corporation, or any indebtedness owed to Corporation by seller. 3. The selling shareholder may not participate in determining whether Corporation will purchase any portion of the offered stock. 4. If all offered stock is not purchased by remaining shareholders or Corporation pursuant to the provisions of this Agreement, no offered stock may be purchased by either Corporation or remaining shareholders. Offered stock may then be sold by the selling shareholder to the third party at the price and terms in that party's offer. 5. A selling shareholder may not sell stock at a price or term that differs from the original offer without first reoffering the offered stock to remaining shareholders and Corporation pursuant to the procedures set forth in this Section. 6. In the event of a sale of stock from a shareholder to another shareholder or to Corporation, closing shall occur at a time mutually agreed on by the parties to the sale. However, closing may not occur later than ____ days from the sale date. On the sale date, the selling shareholder shall deliver the stock to ____________________ the agreed upon escrow agent representing Corporation. The agent shall hold the stock until full payment is made, and shall then deliver the stock to the purchaser. D. If offered stock is not purchased by the third party pursuant to this Section within ____ days from the date of selling shareholder's receipt of the third party's offer, the offer shall be deemed to have expired. If seller still wishes to accept the third party's offer, the offered stock must be reoffered to remaining shareholders and Corporation pursuant to the procedures outlined in this Section. E. Any person acquiring offered stock from a shareholder shall become bound by the terms of this Agreement immediately after acquiring the interest in stock of Corporation. Transfer of the offered stock on Corporation's books shall not be accomplished until a copy of this Agreement is executed by the acquiring person. However, failure or refusal to sign this Agreement shall not relieve any person acquiring an interest in Corporation's stock from the obligations set forth in this Agreement. F. On sale of all stock owned by a shareholder, all interests of such shareholder with respect to the stock sold shall terminate, and such shareholder shall resign as an officer or director of Corporation effective no later than the closing date of the sale. 5. Transfers of Stock after Shareholder Death A. In the event of the death of a shareholder, Corporation shall purchase the stock owned by the decedent shareholder at the time of such shareholder's death. Purchase of stock under this section shall be at the sale price as defined in this Agreement. Corporation shall give notice of its intent to purchase to remaining shareholders and decedent's estate within ____ days of the death of decedent shareholder. Decedent shareholder's estate shall sell decedent's stock to Corporation. B. Corporation shall purchase life insurance of $____________ on the life of each shareholder to insure that a substantial portion of the sales price will be available for purchase of shares. Corporation shall be the owner and beneficiary of the policies, and shall be responsible for payment of all premiums to maintain insurance coverage in force and effect. On the death of a shareholder, Corporation shall collect the insurance proceeds from the applicable policy and shall immediately pay to the decedent shareholder's estate as much of the insurance proceeds as is necessary to pay the sale price for the decedent shareholder's stock. If the amount of the life insurance proceeds exceeds the sale price of the stock purchased by Corporation, ________ (percentage) of the excess shall be paid to the decedent shareholder's estate. 6. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 7. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 8. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of _____________. 9. Notices Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 10. Attorney’s Fees In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees. 11. Mandatory Arbitration Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 12. Entire Agreement This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 13. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. 14. Assignment of Rights The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party. 15. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine. WITNESS our signatures as of the day and date first above stated. ____________________________ (Name of Corporation) By: ____________________________ _______________________________ _____________________________ _____________________________ (P rinted Name & Office in Corporation) (P rinted Name of First Shareholder) _____________________________ _____________________________ (Signature of Officer) (Signature of First Shareholder) _______________________________ _______________________________ ____________________________ _____________________________ (P rinted Name of Second Shareholder ) (P rinted Name of Third Shareholder) ____________________________ _____________________________ (Signature of Third Shareholder) (Signature of Third Shareholder)