§ 2.03[5] Shareholders' AgreementTo the extent that shareholders in a PC focus and agree upon the divisions
and distributions of power, authority, responsibility and income, they usually
embody their agreements in a shareholders' agreement. Since lawyers tend to have
as their paradigm the general partnership concept, it is not unusual to find the
substantive provisions of a shareholders' agreement to be much like those of a
general partnership agreement in concept and to be its functional equivalent in
practice. Such agreements typically cover the same issues as do partnership
agreements, except to the extent that some of those issues, (such as the name
and the number of shares authorized, their par value and corporate purpose) are
already dealt with in such documents as its certificate of incorporation and/or
by-laws. However, by-law provisions are often superseded by the stockholders'
agreement and it is common to find a provision in a shareholders' agreement
which obligates the shareholders and the corporation to modify those by-laws,
and, if necessary, its certificate of incorporation, in order to avoid conflict
between them and the shareholders' agreement.
As with partnership agreements, PC shareholders' agreements are as varied
as the philosophies of the shareholders who create them. Nevertheless, they
typically deal with governance, decision-making, income-sharing, indemnities,
redemption of shares, repayments of loans, termination of the relationship of
the shareholder to the corporation and to the other shareholders, through
voluntary and compelled withdrawal, retirement, death and disability, as well as
issues resulting from the corporate form, such as preemptive rights and the
issuance of additional shares.
Shareholders' agreements often reallocate the statutory or by-law
responsibility between the directors and the shareholders with respect to
certain kinds of activities. One potential consequence of doing this under the
corporate law of those jurisdictions which otherwise absolve shareholders from
liability for corporate obligations, other than their own professional
misconduct and that of their supervisees, is to expose shareholders to the risk
of directors' liability, which under corporate law is greater than that of
shareholders.
The shareholders of a law firm PC, like the shareholders of any other
privately-held corporation, have no liability for the corporation's obligations,
except for those prescribed by statute. Although the major statutory exceptions
are found in the state codes governing the PC, other statutes can result in
liability for PC shareholders, as well as for the shareholders of other
corporations. For example, in at least one jurisdiction, the ten largest
shareholders of a non-public corporation are liable for certain unpaid salaries
and the Internal Revenue Code effectively imposes prima facie liability for
certain withholding taxes (including withholding taxes on wages) on any
"responsible person," which can include controlling shareholders of a
corporation, PC or otherwise. The following form is a model shareholder's agreement for a professional
service corporation which has been managed over the years by two founding
shareholders and is about to admit a new shareholder.
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
This AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT is effective as of the
___ day of ________, 20____, by and among __________________________________,
P.C. a ______________________ professional service corporation (together with
its successors and assigns, however named, hereinafter referred to as the
"Corporation"), ____________________ ("_____________"), ____________________
("____________"), ____________________ ("_____________"), ____________________
("____________"), ____________________ ("_____________") and
_________________________________.
WITNESSETH:WHEREAS, __________________________ and __________________________ were
the Founding Shareholders of the Corporation (the "Founding Shareholders");
WHEREAS, ___________________________________, ___________________,
________________, ___________________, __________________, __________________,
and ________________________ previously entered into a Stockholders' Agreement
dated as of _________________, 20__ (the "Previous Agreement");
WHEREAS, the Existing Shareholders collectively own 100% of the issued and
outstanding shares of the Corporation's common stock (the "Corporate Stock")
immediately prior to the execution hereof;
WHEREAS, simultaneously with the execution hereof, ______________ has
acquired _________ shares of Corporate Stock from the Corporation pursuant to a
Stock Purchase Agreement, dated the date hereof, in the form attached hereto as
Exhibit A (the "Purchase Agreement");
WHEREAS, the Existing Shareholders desire to make provision for
______________ to become a Shareholder and to modify, amend and restate the
Previous Agreement as provided herein;
WHEREAS, the parties hereto recognize and confirm that upon the completion
of such purchase of stock, ___________________, ______________________,
___________________, __________________, ______________________ and
_____________________ shall constitute the holders of all of the issued and
outstanding shares of stock of the Corporation and for all purposes of this
Agreement said parties shall be hereinafter sometimes referred to individually
as a "Shareholder" and collectively as "Shareholders";
WHEREAS, the Shareholders desire to provide for the continuity of the
Corporation's management and to promote their mutual interests and the interests
of the Corporation by imposing certain conditions, restrictions and obligations
on themselves, on the Corporation, and on the shares of the Corporate Stock;
WHEREAS, the By-laws of the Corporation permit certain agreements to be
entered into between and among the Shareholders and/or the Shareholders and the
Corporation with respect to the operation and management of the Corporation and
the transfer of the Corporate Stock, and contemplate that all shares of the
Corporate Stock shall thereupon be subject to such agreements and transferable
only upon compliance therewith; and
WHEREAS, the Shareholders and the Corporation desire to enter into such an
agreement.
NOW, THEREFORE, the parties hereto, for and in consideration of the mutual
covenants herein contained, and for Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, hereby agree as follows:
Article 1-Definitions
1.1. "Book Value" shall mean the aggregate amount of assets (including
accounts receivable aged less than One-hundred Eighty (180) days)) plus work in
process (which term shall include all billable time through such effective date,
whether then or subsequently recorded, but excluding the time charged on any
contingent fee cases), less Twelve Percent (12%) for adjustments, minus the
aggregate amount of liabilities (excluding liabilities for expenses ultimately
chargeable to clients but not yet billed) appearing on the books and records of
the Corporation as of ___________ __, 20__, divided by the number of outstanding
shares of Corporate Stock, which computation shall be made by the independent
accountant then engaged by the Corporation using generally accepted accounting
principles, consistently applied and/or with appropriate adjustments for changes
in principles or methodologies from prior periods. For purposes of this
computation, it is agreed that the aggregate accounts receivable aged less than
One-hundred Eighty (180) days for the Corporation shall be reduced by estimated
bad debts which is calculated at the end of the previous calendar year in
accordance with practices consistent with those employed in prior periods.1.2. "Case in Progress" shall mean each case in which the Corporation
shall actually have received in its possession a retainer or engagement
agreement executed by the client on or prior to the date of withdrawal of the
Shareholder.
1.3. "Concluded Case" shall mean each case in which an offer of settlement
has been notified to the client on or prior to the date of withdrawal of the
Shareholder and which offer has been or subsequently is accepted; and shall mean
each case which has been tried to a conclusion in which a verdict has been
rendered in favor of a client for monetary damages on or prior to the date of
withdrawal of the Shareholder.
1.4. "Deferred Value" shall be computed by multiplying the ratio of the
Total Resource Investment as of the applicable Valuation Date, to the Total
Resource Investment after the Valuation Date, by the decimal equivalent of the
Shareholder's percentage ownership of Corporate Stock on the Valuation Date, and
multiplying the product by the total fee recovered (net of costs of collection
and administrative costs).
1.5. "Former Shareholder" shall mean at any time each individual (not then
a Shareholder under this Agreement) who shall have been a Shareholder under this
Agreement, and whose status as such a Shareholder, shall have terminated for any reason.
1.6. "Net Fee" shall mean the gross fee actually received by the
Corporation on each case, less all disbursements, participation fees to other
attorneys, and any and all other actual expenditures paid, incurred or accrued
in connection with each case.
1.7. "Practice" shall mean the activities of the Corporation as authorized
by this Agreement and by law, and shall include all those activities of the
Shareholders, the income from which, by the terms hereof, belongs to the
Corporation.
1.8. "Total Resource Investment" shall equal the total hours charged to
any client matter at each timekeeper's standard hourly billing rate, plus all,
direct costs incurred by the Corporation and not reimbursed by the client.
Article 2-General
2.1. Correct Statements. All of the statements hereinabove contained are
true and correct in all respects, and are incorporated herein by reference.
2.2. Termination of All Prior Agreements. The parties hereto hereby
terminate, cancel and void any and all prior agreements, including without
limitation the 19__ Agreement and the 20__ Agreement, and all amendments
thereto, whether written or oral or in any other form, providing for or
addressing any or all of the matters herein contained.
2.3. Purpose. The purpose of the Corporation is to engage in the general
practice of law and to conduct all types of business incident thereto.
2.4. Location. The principal place of business of the Corporation shall be
at ____________________________________________. This location may be changed
and/or additional offices maintained at such places as may be determined by the
Board of Directors. Such location, changes or additions may be made without
formal written amendment of this Agreement.
2.5. Term. The Corporation shall continue until terminated in accordance
with the terms of Article 12 of this Agreement.
2.6. Fiscal Year. The fiscal year of the Corporation shall be the calendar
year. All references to "year" in this Agreement shall be deemed to refer to the
calendar year.
Article 3-Duties of Shareholders
3.1. Full Time Efforts. Each Shareholder shall devote his full time,
ability, energy and best endeavors, to be used and employed in common among the
Shareholders, in furtherance of the Corporation, except as otherwise herein provided.
3.2. Vacations. Shareholders may take such reasonable vacations as may be
agreed upon by the Board of Directors.
3.3. Outside Interests. Subject to the provisions of Section 3.1 and
Section 8.1 hereof, any Shareholder may participate or be interested in any
business venture or enterprise other than the Practice; provided, however, that
the same shall not (a) be conducted under the present, past or future name of
the Corporation (or any predecessor of the Corporation) or a name which bears a
similarity thereto, (b) involve the private practice of law, or (c) adversely
affect the operations of the Corporation. The proceeds of any such venture or
enterprise shall belong to such Shareholder, and the Corporation shall not
participate in any income, profits or losses therefrom or in connection
therewith by virtue of this Agreement. If any legal services are rendered by the
Corporation or such Shareholder in connection therewith, such Shareholder shall
pay or cause to be paid to the Corporation the fair and reasonable value of the
services so rendered.
3.4. Code of Professional Responsibility. Each Shareholder at all times
shall comply with all of the applicable provisions of the Code of Professional
Responsibility and with the statutes, rules and regulations covering all
professional services that the Shareholder shall render.
3.5. Corporation Obligations. No Shareholder shall incur, in the
Corporation name (or in the name of any other Shareholder), any obligation, make
or endorse any note, become a guarantor or surety for any person whomsoever, or
sell, assign, transfer, pledge, mortgage, encumber or otherwise dispose of any
of the business or assets of the Corporation or the other Shareholder, as the
case may be without the consent of the Board of Directors.
Article 4-Management4.1. Board of Directors.(a) The Corporation shall be managed by a Board of Directors and
such Board of Directors shall elect all officers of the Corporation. The Board
of Directors shall consist of not less than Two (2) members, and subject to the
provisions of subparagraph (b) of this Section 3.1, each such member shall be
elected by the affirmative vote of those Shareholders owning not less than
Seventy Percent (70%) of the then issued and outstanding shares of Corporate Stock.
(b) In connection with the management of the business and activities
of the Corporation, the election of the Board of Directors, and the election of
officers, it is hereby specifically agreed as follows:
(i) So long as ____________ and/or ____________ are
Shareholders of the Corporation, each of them shall be entitled to nominate
himself or any qualified person as a candidate for membership on the Board of
Directors, and each and all of the Shareholders hereby jointly and severally
covenant and agree that they shall affirmatively vote for the election of the
person or persons so nominated by _______________ and/or ____________. In the
event of the Disability of _______________ and/or _____________ notwithstanding
his/her or their inactivity, the provisions of this subparagraph (i)
nevertheless shall continue in full force and effect so long as each such
Disabled person remains a Shareholder of the Corporation. In the event of the
incompetency or incapacity of _______________ and/or ________________, the
guardian of the property of such incompetent person or such other person acting
for or on behalf of such incompetent shall be entitled to make and effect the
nomination provided under this subparagraph (i), as well as to serve as the
candidate and the elected member of the Board of Directors. (ii) After such time as either ________________ or
_______________ is not a Shareholder of the Corporation, then each Shareholder
attending the meeting of Shareholders of the Corporation for the purpose of the
election of members of the Board of Directors, shall have the right and
opportunity to nominate a candidate for membership on the Board of Directors,
and in such event, each and all of the Shareholders shall be entitled to vote
for the respective candidates of their choice. However, so long as either
________________ or _________________ is a Shareholder of the Corporation, one
member of the Board of Directors of the Corporation shall be nominated by
him/her and all parties bound by this Agreement shall vote for such nominee. (iii) Any person serving on the Board of Directors and any
Shareholder shall have the right to serve as President and/or in any other
office of the Corporation upon election by the Board of Directors.
4.2. Decisions and Determinations of the Board of Directors. Except as
otherwise herein expressly provided, the Board of Directors shall be empowered
to establish its operating procedures and shall have, subject to this Section
4.2, the final authority on all Corporation matters, including, inter alia, the
following:
(a) To approve and incur capital expenditures exceeding $______ but
not exceeding $__________ in amount. (b) To formulate and administer billing policies and practices and
to formulate write-off policies and practices.
(c) To recommend to the Shareholders proposed amendments to this
Agreement.
(d) To make recommendations to the Shareholders respecting major
changes in the scope or nature of the Corporation, including recommendations
regarding (i) acquisition or disposal of premises; (ii) the merger with other
law firms or the making of organic changes in the structure of the Corporation;
or (iii) the branching or affiliation of the Corporation with another law firm.
The Board of Directors may terminate any Shareholder for any reason with or
without cause.
(e) The engagement of services of any and all attorneys as employees
of the Corporation, the terms and conditions of their respective employment
arrangements, and all other matters relating to the engagement and/or
termination of such services shall be subject to the approval of the Board of
Directors.
4.3. Shareholder Matters.(a) Additional shares of Corporate Stock may be authorized and/or
issued only upon the approval of those Shareholders owning a simple majority of
the then issued and outstanding shares of Corporate Stock. (b) As long as the Founding Shareholders collectively own a majority
of the issued and outstanding shares of Corporate Stock of the Corporation, they
shall have the sole discretion as to salaries set for the ensuing fiscal year
and bonuses to be awarded to Shareholders.
(c) The Shareholders agree to reaffirm the By-laws of the
Corporation, giving effect to and fully carrying out the provisions of this
Agreement and particularly the provisions of this Article 4.
Article 5-Operational Matters
5.1. Bank Accounts. All funds, checks, notes and drafts received for or on
behalf of the Corporation shall be deposited promptly in the account or accounts
maintained by the Corporation in such bank or banks as shall be determined by
the Corporation. All Corporation moneys shall be withdrawn only by checks signed
by one or more members of the Board of Directors. The Corporation shall continue
to maintain not fewer than Two (2) bank accounts in the Corporation name, one of
which shall be for funds deposited in escrow and funds collected, received or
held for clients, or for distribution in connection with clients' transactions.
The Corporation may maintain other bank accounts for special purposes and may
open such additional bank accounts as the Corporation shall determine from time
to time. The Corporation's banking records and practices shall comply with
applicable requirements of the State of Florida and applicable law.
5.2. Gifts to Shareholders. It is the general policy of the Corporation
that a gift of any value offered to a Shareholder in lieu of payment for
services or disbursements shall not be accepted.
5.3. Books and Records. There shall be kept at all times, at the principal
office of the Corporation, accurate books of account reflecting all moneys
received, paid, advanced or expended by the Corporation. The books of account
shall be kept and continually maintained in accordance with generally accepted
accounting principles on a cash basis. Each Shareholder shall have the right, in
person or by representative, upon reasonable notice and in a non-disruptive
manner during normal business hours, to inspect the books and records of the
Corporation in order to evaluate or verify the accuracy of any information
furnished by the Corporation or to evaluate or verify his or her rights or
obligations hereunder. However, nothing contained herein shall be construed to
permit the copying, publication or other dissemination of any privileged,
confidential or proprietary information pertaining to clients of the Corporation
for whom the requesting Shareholder is not the primary relationship attorney, or
anything whatsoever that creates an additional expense, cost or liability to the
Corporation.
Article 6-Insurance6.1. Insurance. The Shareholders and the Corporation may fund any and all
death and/or disability purchases or redemptions of Corporate Stock provided
hereunder by the purchase and maintenance of life insurance buy-out policies
and/or disability insurance buy-out policies on the lives and productive
capabilities of the Shareholders. All policies purchased and maintained for such
buyout purposes shall be designated as such in a writing signed by the named
insured attached to the original policy, which shall be tendered to be kept with
the official corporate records of the Corporation at its principal office.
However, in the absence of compliance with the foregoing provisions, a life or
disability insurance policy (including any group disability policy) shall be
presumed not to be for the purpose of purchase or redemption of Corporate Stock
hereunder.
(a) In the event of the termination of this Agreement or withdrawal
of a Shareholder for any cause other than the death of a Shareholder, the
insured Shareholder shall have an option, exercisable within Thirty (30) days
after such termination, to purchase the policies on his/her life or insuring
his/her Disability (except in the event of a life or disability insurance policy
designated to facilitate the buy-out of his/her Corporate Stock) owned by any
other Shareholder(s) or the Corporation which at the time of termination were
subject to this Agreement, by paying for same a price equal to the sum of:
(i) the cash surrender value thereof, if any, calculated on a
pro-rata basis to the date of the transaction, plus
(ii) the pro-rata portion of any premiums paid prior to such
date which covers a period extending beyond the date of the transaction, plus
(iii) any dividend accumulations, less
(iv) any policy loan plus interest then due with respect to
such loan.
(b) Notwithstanding anything to the contrary contained herein, in no
event shall a Shareholder with respect to whom there is pending or in progress a
lifetime buy-out of his/her Corporate Stock (for any reason, including
disability or any other lifetime withdrawal) be permitted to purchase any policy
or policies of insurance which are subject to this Agreement and owned by any
other Shareholder(s) or the Corporation until the expiration of Thirty (30) days
after the termination of all obligations of the purchasing Shareholder with
respect to such lifetime buy-out. (c) In no event shall a Shareholder who is the owner of a life
and/or disability insurance policy or policies, which policy or policies are
subject to the terms of this Agreement, exercise any of the rights, privileges
or benefits (subsequent to the date of this Agreement, including but not limited
to the borrowing of any cash surrender values) accruing under the said policy or
policies, without the prior written consent of the insured Shareholder. Any
dividends payable upon the policies prior to maturity by death or disability of
the insured shall be paid to the policy owner in cash or disposed of as such
owner may choose to direct. This Agreement shall extend to and include any and
all additional insurance policies issued pursuant to this Agreement.
Article 7-Transfer of Shares7.1. Restrictions on Transfer of Stock. Except as specifically herein
provided, a Shareholder may not sell, assign, transfer, pledge, hypothecate or
otherwise encumber or dispose of (any such action being herein referred to as a
"Transfer") all or any portion of his or her shares of Corporate Stock, except
with the prior written consent of all other Shareholders. Any attempted sale,
assignment, transfer, pledge, hypothecation, encumbrance or other disposition of
any Corporate Stock not in strict compliance with the terms and conditions of
this Agreement shall be null and void and of no force or effect.
7.2. Voluntary Disposition: Rights: Restrictions.
(a) During the lifetime of a Shareholder and prior to a
Shareholder's Disability Inception Date (as hereinafter defined), such
Shareholder (the "Selling Shareholder") may Transfer all but not less than all
of his or her shares of Corporate Stock (the "Offered Stock") to a third party
or parties who are licensed to practice law in the State of __________ (the
"Transferee") only upon the terms and conditions and subject to the restrictions
herein set forth; provided, however, that no Transfer under this Section 7.2
shall be effective until the Transferee shall have delivered to the Corporation
an Acknowledgment and Consent to Agreement in the form attached hereto as
Exhibit B. Notwithstanding the foregoing, the Founding Shareholders may Transfer
some or all of their own shares of Corporate Stock on such terms as they deem
appropriate to new Shareholders in the Corporation, without conditions or
restrictions of any kind. (b) In the event of any proposed voluntary Transfer by a Selling
Shareholder, such Offered Stock first must be offered in writing to the other
Shareholders (the "Offeree Shareholders") in pro-rata proportions determined by
dividing the number of shares of Corporate Stock owned by each such Offeree
Shareholder by the total number of shares of Corporate Stock owned by all of the
Offeree Shareholders. Each such offer so submitted shall identify the name and
address of the Transferee who has irrevocably offered or otherwise agreed to
purchase all of the Offered Stock and the terms and conditions of such binding,
bona fide offer. (c) The Offeree Shareholders shall have the option to purchase all
or a portion of their respective pro-rata amount of the Offered Stock, at the
lesser of the price (and on the terms) specified in the written offer from the
Transferee, or the price determined in accordance with Section 9.2 hereof, to be
paid in accordance with Section 9.3 hereof. (d) Each Offeree Shareholder shall have a period of Sixty (60) days
from the date of the delivery of the written offer from the Selling Shareholder
to accept such offer and acquire all or a portion of his/her pro-rata percentage
of the Offered Stock. If any Offeree Shareholder has not accepted the offer as
to all of his/her pro-rata percentage of the Offered Stock upon the expiration
of the Sixty (60) day period (or if an Offeree Shareholder has sooner waived in
writing the right to accept the offer as to some or all of such Offered Stock),
the remaining Offeree Shareholders shall have an additional Thirty (30) day
period to accept the offer as to any remaining shares of Offered Stock which are
a part of the offer, which shall be apportioned between them pro-rata unless
they agree to some other apportionment. If the Offeree Shareholders have not
accepted the offer as to all of the Offered Stock upon the expiration of the
foregoing specified time periods (or if they have sooner waived in writing the
right to accept the offer as to some or all of such Offered Stock), the Selling
Shareholder shall offer all remaining shares of Offered Stock to the Corporation
in the same manner and upon the same terms as the offer to the Offeree
Shareholders. If the Corporation has not accepted the offer upon the expiration
of an additional Thirty (30) day period (or if it has sooner waived in writing
the right to accept the offer as to some or all of such shares) the Selling
Shareholder shall have the right for a period of Sixty (60) days after the
expiration of all option rights of all other Shareholders and the Corporation to
dispose of only those shares of Offered Stock with respect to which an offer was
submitted to the Offeree Shareholders and the Corporation and which such
Shareholders and the Corporation have elected not to purchase, but only to the
Transferee identified in the original written offer and only on the terms
indicated therein. If the Offered Stock is not disposed of by the end of the
Sixty (60) day period, the Offered Stock shall again become subject to the terms
of this Agreement.7.3. Option Upon Involuntary Transfer.(a) If, other than by reason of a Shareholder's death or Disability
(as hereinafter defined), shares of Corporate Stock are transferred by operation
of law to any person, such as, but not limited to, a Shareholder's trustee in
bankruptcy or purchaser at any creditor's or court sale (the "Transferred
Shares"), such Shareholder must promptly provide written notice of the Transfer
to the other Shareholders (the "Other Shareholders"). Each Other Shareholder,
within Sixty (60) days of his/her receipt of the written notice of the Transfer,
may exercise an option to purchase all or a part of his/her pro-rata percentage
of such Transferred Shares (determined by dividing the number of shares of
Corporate Stock owned by each such Other Shareholder by the total number of
shares of Corporate Stock owned by all of the Other Shareholders) at the price
determined in accordance with Section 9.2 hereof, payable in accordance with
Section 9.3 hereof.
(b) If any such Other Shareholder has not exercised the option to
purchase as to his/her pro-rata amount of the Transferred Shares upon the
expiration of the Sixty (60) day period (or if he/she has sooner waived in
writing the right to exercise his/her option as to some or all of such
Transferred Shares), the remaining Other Shareholders shall have an additional
Thirty (30) day period to exercise an option as to any remaining Transferred Shares.
(c) If such Other Shareholders fail to exercise the option to
purchase as to all such Transferred Shares, the Corporation shall have an option
for an additional Thirty (30) days to purchase all or a portion of such
remaining Transferred Shares on the same terms and conditions as provided for
the Other Shareholders.
(d) If all of the Transferred Shares are not purchased in their
entirety by the Other Shareholders and/or the Corporation, then the remaining
Transferred Shares not so purchased shall remain subject to such involuntary
Transfer. However, if the Transfer of such Transferred Shares is not effectively
consummated within Sixty (60) days, the Transferred Shares shall again be
subject to the terms of this Agreement.
7.4 Closing. Upon the exercise of any option to purchase shares of
Corporate Stock in accordance with the foregoing provisions of this Article 7,
the closing of all such transactions relating to each proposed voluntary or
involuntary Transfer shall take place simultaneously, and sale shall take place
at the office of the Corporation within Fifteen (15) days after the expiration
of all purchase options relating thereto which are provided in Sections 7.1, 7.2
and 7.3 hereof.
7.5 Transfer to Non-Shareholder Transferee. In the event that any shares
of Corporate Stock are Transferred to or in any manner acquired by any person or
party who was not theretofore a Shareholder, then and in such event, such shares
of Corporate Stock shall nevertheless remain subject to all the provisions of
this Agreement. In such event, all transferees of such Corporate Stock shall be
deemed Shareholders for purposes of this Agreement, shall be bound by all of the
terms and conditions herein contained, and, shall upon request by a Shareholder,
immediately deliver to the Corporation an Acknowledgment and Consent to
Agreement in the form attached hereto as Exhibit B. In the event any transferee
fails to execute such Acknowledgment and Consent, such refusal or failure shall
be deemed an offer by such transferee to sell all his/her shares of Corporate
Stock to such Shareholder(s) making the request at a price equal to One-Third
(1/3) of the Book Value of the Corporate Stock on the date of such request, as
defined in Section 9 hereof, and until such Acknowledgement and Consent is so
executed, such transferee shall be deemed to have waived all voting rights with
respect to the Corporate Stock and all rights to receive any and all
distributions from the Corporation with respect to the Corporate Stock.
Article 8-Disability8.1 Determination of Disability. It is hereby recognized and agreed that
all of the Shareholders are active full-time employees of the Corporation and
shall have such duties and obligations to perform services for the Corporation
as shall be determined from time to time by the Board of Directors of the
Corporation. In the event that any Shareholder shall, in the opinion and sole
discretion of a physician selected by the Board of Directors of the Corporation,
suffer a physical or mental disability of such nature so as to render the
Shareholder unable to perform his/her usual and ordinary services for the
Corporation (a "Disabled Shareholder"), then, and in such event, such
Shareholder shall be deemed to be "Disabled" and/or to have suffered a
"Disability" for purposes of this Agreement.
8.2 Disability Payments by Corporation. In the event of any such
Disability of a Shareholder, such Disabled Shareholder as an employee of the
Corporation shall continue to receive payments of compensation during the course
of such Disability if and to the extent so provided in a written Employment
Agreement with the Corporation; provided, however, that if such Shareholder is
not a party to such an Employment Agreement, then and in such event during the
course of such Disability, such Shareholder shall continue to receive an amount
equal to his/her salary compensation during such term of Disability for a
maximum period of Three (3) months after the date such Disability began (the
"Disability Inception Date") and, thereafter, the Shareholder shall not be
entitled to the receipt of any additional salary, bonus, or other compensation
during the remainder of such period of Disability.
8.3 Rights of Corporate Stock of Disabled Shareholder. During such period
of Disability, such Shareholder shall nevertheless continue to be entitled to
exercise any and all voting rights and to receive any Corporation distributions
with respect to his/her ownership of Corporate Stock.
8.4 Mandatory Purchase of Stock Upon Disability. If the Disability
continues for a period of Twelve (12) consecutive months from the Disability
Inception Date, then, upon the expiration of such Twelve (12) month period (such
expiration date hereinafter referred to as the "Disability Anniversary Date"),
the remaining Shareholders or the Corporation, as the case may be, shall be
obligated to purchase all of the Corporate Stock of the Disabled Shareholder in
accordance with the provisions of Article 9 below.
Article 9-Mandatory Sale and Purchase of Corporate Stock Upon Death, Disability
or Other Termination of Employment
9.1 Mandatory Transfer. A Shareholder, or the duly appointed trustee(s),
guardian(s), personal representative(s) of the estate of a Shareholder or other
successor in interest (whether one or more, the "Personal Representative"), as
the case may be, shall sell and convey all of such Shareholder's shares of
Corporate Stock, and all remaining Shareholders shall purchase all of such
shares of Corporate Stock ("Mandatory Transfer"), pro-rata according to their
respective numbers of shares of Corporate Stock owned prior to such Mandatory
Transfer upon the first occurrence of any one of the following events:
(a) Death of the Shareholder.
(b) The occurrence of a Date of Disability with respect to the
Shareholder. (c) The Shareholder's loss of his/her license or ability or right to
practice law, abandonment of responsibilities to the Corporation or acceptance
of contradictory employment, or the termination of the full-time employment of
the Shareholder as an employee with the Corporation for any reason other than
death or Disability, regardless of whether any such termination is voluntary or
involuntary.
Each Mandatory Transfer made in accordance with the provisions of this
Article 9 shall be consummated at the purchase price determined in accordance
with Section 9.2 hereof and shall be paid in accordance with the provisions of
Section 9.3 hereof.
9.2 Purchase Price.(a) The purchase price (the "Purchase Price") of the Corporate Stock
subject to a Mandatory Transfer shall equal the Book Value of the Corporate
Stock as of the last day of the calendar month immediately preceding the
calendar month in which the event giving rise to the Mandatory Transfer shall
have occurred (the "Valuation Date"), plus the Deferred Value (whenever
realized) of all contingent fee matters being handled or participated in by the
Corporation as of such Valuation Date. For purposes of this Section 9.2, in the
event of the occurrence of a Disability Anniversary Date with respect to any
Shareholder, the calendar month in which the event giving rise to such Mandatory
Transfer for purposes of determining the Valuation Date shall be the calendar
month in which falls the Disability Inception Date and not the calendar month in
which occurs the Disability Anniversary Date.
(b) If the Corporation is the owner and/or beneficiary of any policy
or policies of life insurance or disability insurance which are designated as a
means of funding the purchase or redemption of the Corporate Stock of a deceased
or Disabled Shareholder in accordance with Article 6 hereof, only the cash value
of such insurance policy or policies immediately prior to an occurrence giving
rise to benefits under such insurance policy or policies, less any debt or
borrowings against such cash value and any premiums or other amounts owed on
account of such insurance policy or policies shall be deemed an asset of the
Corporation for the purpose of calculating the Book Value. Without limiting the
generality of the foregoing, the benefits or proceeds of any such insurance
policy or policies shall not be included as an asset of the Corporation for
purposes of the computation of Book Value provided for in this Section 9.2. (c) Notwithstanding any provisions herein to the contrary, the
Purchase Price for the Corporate Stock of a Shareholder whose full-time
employment with the Corporation is terminated for any reason other than death or
Disability, except as otherwise provided herein, and regardless of whether any
such termination is voluntary or involuntary shall be its Book Value as of a
Valuation Date which is the last day of the calendar month immediately preceding
the calendar month in which the event giving rise to such termination occurred,
plus the Deferred Value, at such time as a Deferred Value amount becomes payable.9.3 Payment of Purchase Price.(a) The receipt, directly or indirectly, by any Shareholder, his/her
estate, survivor(s) or Personal Representative, of the benefits or proceeds of
any insurance policy or policies in the event of the Shareholder's death or
Disability of which the Corporation is or has been a payor, owner and/or
beneficiary (designated as being held by the Corporation for the purpose of a
buy-out of the Shareholder's Corporate Stock as provided above) shall be deemed
a payment in redemption of the Shareholder's Corporate Stock at its Book Value
and Deferred Value, and such Corporate Stock as redeemed through such payment(s)
shall cease to be owned by the Shareholder and shall instead be converted to
treasury shares and noted accordingly on the books and records of the
Corporation. Upon the death or Disability Anniversary Date of a Shareholder, and
in the further event that any one or more of the remaining Shareholders or the
Corporation is entitled to receive proceeds of insurance upon such death or
effective Disability for the purpose of a buy-out of shares of Corporate Stock
pursuant to this Agreement, then such other Shareholder(s) or the Corporation,
as the case may be, shall purchase or redeem so much of the remaining Corporate
Stock of the deceased or Disabled Shareholder as is represented by such
insurance proceeds, and shall make payment therefor within Ten (10) days after
receipt of such insurance proceeds or within Sixty (60) days after the
appointment and qualification of the Personal Representative of the Shareholder,
whichever shall last occur. (b) After the application of all insurance proceeds as hereinabove
provided, any shares of the Corporate Stock of the deceased or Disabled
Shareholder which remain shall be purchased by the remaining Shareholders who
elect to purchase the same, or shall be redeemed by the Corporation in the same
manner as provided in Section 7.1 hereof, except that the payment of the
Purchase Price shall be made in Three (3) equal successive installments which
shall be due and payable on or before January 15, May 15, and August 15
immediately following the date of closing. Unless otherwise required in
accordance with applicable federal tax law in order for the recipient to avoid
being charged with imputed interest, such installment obligation shall not bear
interest. If interest is required to be paid in the opinion of the accountant
for the Corporation, such accountant shall designate the appropriate rate, and
accrued interest will be paid at time same time and manner as the principal
payments. The installment obligations for the payment of the Purchase Price
hereunder shall be evidenced by a negotiable promissory note, executed by the
purchaser of such Corporate Stock, secured by a collateral stock pledge
providing that the Corporate Stock so purchased shall stand as security for
repayment of the promissory note and that the Corporate Stock shall be forfeited
by such purchaser in the event of non-payment.
9.4 Additional Provisions Applicable Upon a Mandatory Transfer.(a) If, upon the Mandatory Transfer of the Corporate Stock of a
Shareholder under this Article 9, such selling Shareholder at such time is a
personal guarantor on any one or more obligations of the Corporation, then the
Corporation and the remaining Shareholders shall use their best efforts to cause
such selling Shareholder and his/her spouse and/or Personal Representative to be
relieved of any and all obligations by virtue of all such personal guarantees.
In the event that the Corporation and the remaining Shareholders are unable to
obtain such releases of guarantee in full, then the Corporation and the
remaining Shareholders hereby jointly and severally indemnify and hold harmless
such selling Shareholder, his/her spouse and/or Personal Representative from any
and all claims, demands, actions, suits, debts, liabilities and obligations of
every nature and description arising, directly or indirectly, by virtue or any
and all such personal guarantees, including, but not limited to, attorneys' fees
and collection costs.(b) In the event that a selling Shareholder, at the time of his/her
sale of Corporate stock under this Article 9, owes any monies or other
obligations to the Corporation, then the amount of all such debts shall be
deducted from the down payment of the purchase price due in accordance with the
provisions of this Article 9, and to the extent any and all such debts exceed
the amount of such down payment, same shall be deducted from the next succeeding
installment payments of principal due on the Purchase Price hereunder until such
debts have been repaid in full.
Article 10-Payment
10.1 Payment Default; Remedies. In the event that any purchaser of
Corporate Stock under Article 9 shall default in any payment of the Purchase
Price, or shall fail to perform any term, condition or provision hereunder, and
such default or failure shall not be cured within Fifteen (15) days after the
date of receipt of notice in writing of such default, or in the event that any
purchaser, endorser or guarantor, commits an act, which under the Federal
Bankruptcy Act constitutes an act of bankruptcy, then in any such event the
entire amount of the then unpaid balance of the Purchase Price shall immediately
become due and payable, without further action, notice or demand.
10.2. Voting Shares Pending Full Payment. So long as a purchaser is not in
default under the purchase agreement, the purchaser, pending completion of
payment for said Corporate Stock and upon compliance with the terms and
conditions of the purchase agreement, shall have the right to vote said
Corporate Stock on all occasions. Under such circumstances, neither the Stock
Transfer Agent nor seller may vote said Corporate Stock, and said Stock Transfer
Agent and seller, wherever demand is made upon them, or either of them, shah
execute and deliver an effective proxy or proxies.
10.3. Dividends Pending Full Payment for Shares. So long as certificates
of Corporate Stock are held by the Stock Transfer Agent pending completion of
payment for said Corporate Stock, each purchaser, until he/she shall have
defaulted in payment of any part of the Purchase Price, shall own all dividends
declared and paid upon said Corporate Stock, without regard to when declared,
but such dividends shall nevertheless be paid to the Stock Transfer Agent, who
shall apply the same in payment against the next installment due upon the
Purchase Price of said shares, and shall issue a receipt for such payment to the
purchaser. If such dividends are in stock or property, the Stock Transfer Agent
shall hold such stock or property as additional security for the payment of the
balance of the Purchase Price, subject to all of the terms of this Agreement.
10.4. Fees and Expenses. All fees and expenses including, but no by way of
limitation, those of an accountant, attorney and Stock Transfer Agent, incurred
on behalf of the Corporation in enforcing the terms of this Agreement relating
to a sale of shares of Corporate Stock shall be paid or charged to the
Corporation and the selling Shareholder, or his/her Personal Representative, as
the case may be, on an equal basis.
Article 11-Termination of Employment
11.1. Termination of Employment; Restrictions. If the employment of any
Shareholder as attorney-employee of the Corporation shall terminate (rendering
him/her a "Terminating Shareholder") and if upon such termination of employment
such Shareholder's Corporate Stock is sold and purchased hereunder, then upon
any termination of such Shareholder's employment, whether voluntary or
involuntary, the parties agree that the following shall be fully effective and
applicable from and after any such termination:
(a) If requested by the Corporation, such Terminating Shareholder
shall vacate all premises of the Corporation immediately and forthwith upon such
request and shall remove, at his/her sole cost and expense, only such personal
property which belongs solely to such Terminating Shareholder. Upon any failure
of such Terminating Shareholder to vacate any premises of the Corporation upon
such request, the Corporation shall be entitled to remove all personal property
of such Terminating Shareholder and cause same to be delivered to such
Terminating Shareholder or stored on behalf of such Terminating Shareholder, at
the sole cost and expense of such Terminating Shareholder, and the Corporation
shall be further entitled to exercise all rights and remedies at law or in
equity regarding any such trespass by such Terminating Shareholder. (b) All clients who are first introduced to the services of the
Corporation by the Shareholder as a result of such clients being directly
referred to the Shareholder on having direct contact with the Shareholder and
not to any other attorney employed by the Corporation shall be deemed to be
clients of the Shareholder ("Shareholder Clients"). With respect to Shareholder
Clients to whom the Corporation and/or Terminating Shareholder are providing
work based on a contingency fee arrangement, the Terminating Shareholder shall
pay to the Corporation an amount equal to the greater of: (x) all unpaid fees
payable on account of the Cases in Progress for which the Corporation represents
such Shareholder Clients or (y) Twenty-Five Percent (25%) of the Net Fee on each
Case in Progress as of the date of termination of the Shareholder. In addition,
an amount equal to all disbursements actually incurred by the Corporation as of
the date of termination and subsequently recouped on each Case in Progress and
each Concluded Case shall be paid to the Corporation. (c) Upon such termination, such Terminating Shareholder shall have
no right to remove from any or all offices of Corporation any records, reports
or files relating to any Corporation Clients; provided, however, that upon
written request by each client choosing to remain a client of such Terminating
Shareholder upon such termination, the Corporation shall make available to such
Terminating Shareholder, at such Terminating Shareholder's cost and expense to
be paid in advance by the such Terminating Shareholder, copies of any and all
such records, reports or files for which the Corporation has received such
client's written request. In addition, with respect to each Shareholder Client,
as such term is hereinabove defined, upon the making of any and all copies of
such records, reports and files, at the option of the Shareholder, the
Shareholder may receive the originals thereof and have the copies thereof
retained by the Corporation. (d) It is hereby agreed that the Corporation has a proprietary right
in all of its physical locations, telephone numbers and client files, and upon
termination of the services of such Terminating Shareholder hereunder, such
Terminating Shareholder hereby relinquishes any and all claims and interests
therein and uses thereof. (e) It is hereby agreed that upon any violation of any of the
provisions of this Article 11, the Corporation, in addition to all other rights
and remedies it may have at law, shall have all rights in equity to compel
specific performance, and/or to enjoin violations, of such provisions. If the
Corporation prevails in any such action, it shall be reimbursed for all
reasonable attorneys' fees and other costs of such litigation.
Article 12-Termination of the AgreementThis Agreement shall terminate, in whole or in part, in accordance with
the following provisions.
12.1. Bankruptcy. The Agreement shall terminate upon the dissolution of
the Corporation or upon the filing of a voluntary or involuntary petition by or
against the Corporation under Chapter 7 or Chapter 11 of the Bankruptcy Code (or
other similar applicable laws in the Bahamas) or upon the appointment of a
receiver for the Corporation.
12.2. Specific Shareholder. This Agreement shall terminate as to any
specific Shareholder upon the date such Shareholder ceases to own all of his or
her shares of Corporate Stock; provided, however that such termination shall not
relieve such Shareholder from liability for breaches of any of his or her
obligations hereunder prior to such termination.
Article 13-Miscellaneous
13.1. Endorsement Upon Share Certificates. Upon the execution of this
Agreement, each certificate representing shares of Corporate Stock now or
hereafter issued shall contain an endorsement substantially in the following
form, which legend shall mean and refer to this Agreement and any successor
agreement, modification or supplement, irrespective of any reference to the date
of a predecessor instrument: The shares of stock represented by this certificate shall not be sold,
transferred, pledged, hypothecated, encumbered or disposed of in any manner
whatsoever except in accordance with the terms and conditions of an agreement
executed by the Shareholders of the Corporation, a copy of which is on file in
the principal office of the Corporation.
13.2. Legal Proceedings. Any action instituted to enforce or to recover
damages for breach of this Agreement shall be instituted in the __________ Court
of the State of ____________, County of _________________. If any action is
instituted in any other court or before any other tribunal, all parties hereto
consent to removal thereof to the __________ Court of the State of
_______________, County of _________________.
13.3 Notices. All notices, writings, offers, acceptances, refusals,
payments or agreements given or required to be given under this Agreement shall
be made in writing and shall be sent by registered or certified mail, postage
prepaid, return receipt requested, to the principal business office of the
Corporation and to the last known address of each Shareholder receiving same
appearing on the books of Corporation or of which the Corporation has received
notice. Two (2) days after the date of such proper mailing of such notice shall
be deemed to be the date of such notice for purposes of this Agreement.
13.4 Further Acts and Assurances. Each of the parties hereto agrees to
execute and deliver all authorizations, documents and instruments, take such
further actions, and provide such further assurances from time to time, as may
be necessary or advisable to carry out and give full effect to the terms and
conditions of this Agreement.
13.5 Entire Agreement. This is the entire understanding and agreement of
the parties. No alteration, amendment or future understanding shall be binding
unless reduced to writing and signed by all of the parties hereto.
13.6 Persons Bound. This Agreement shall inure to the benefit of and be
legally binding upon the parties hereto and their heirs, Personal
Representatives, administrators, successors, assigns and transferees of them and
each of them.
13.7 Applicable Law. This Agreement is being delivered and is intended to
be performed in the State of ______ and shall be construed and enforced in
accordance with the substantive and procedural laws of such State.
13.8 Time of Essence. With respect to any and all provisions herein
contained setting forth periods of time or dates on which certain events are to
take place or are to be based, it is agreed that each and every such date or
period of time is of the essence in connection with the full performance of all
provisions hereof and no such date or provisions of time may be changed,
altered, amended, except in connection with a formal amendment of this Agreement
in the manner herein provided.
13.9 Amendment. This Agreement may not be amended, supplemented or
modified, except by a written agreement to that effect, signed by the holders of
not less than Seventy Percent (70%) of the issued and outstanding shares of
Corporate Stock. All Shareholders will be provided with advance notice of any
proposed amendment (whether or not their vote is required to adopt or ratify
it), and the original of any amendment which is adopted shall be kept with the
original of this Agreement in the records of the Corporation at its principal office.
13.10 Remedies. Unless otherwise specified herein, all remedies shall be
deemed cumulative, and in addition to any remedies available by law. To the
maximum extent permitted by law, the parties agree that specific performance and
equitable remedies in he nature of injunctive relief shall be available to army
aggrieved party, to compel enforcement of the terms and conditions of this
Agreement.
13.11 Severability. If any term, provision or condition of this Agreement
shall be found by any court of competent jurisdiction to be against public
policy, illegal or void in any manner whatsoever, and such determination shall
be upheld upon exhaustion of all appeals, such determination shall have no
effect on the remaining terms, provisions and conditions of this Agreement and
the remainder of this Agreement shall be read and interpreted as if such void or
illegal provision were not apart hereof. If any term, provision or condition of
this Agreement must be restricted in its scope, duration or effect in order to
be enforceable by law, the parties hereby acknowledge their intention and
agreement that it be so restricted, to the minimum extent required to render it
legally enforceable.
13.12 Construction.
(a) Wherever used herein, (i) the singular shall include the plural
and the plural shall include the singular; and (ii) the use of the masculine,
feminine or neuter gender shall include the use of any other gender where
applicable. (b) Wherever used herein, the terms "shares of Stock" or "Stock
Certificates" or "Share Certificates" shall include, where applicable, voting
trust certificates and/or shares represented thereby; and all restrictions,
terms and conditions hereof applicable to shares of stock certificates
representing such shares shall be equally applicable to voting trust
certificates and to any and all interests of Shareholders represented by voting
trust certificates.13.13 Counterparts. This Agreement may be executed in several counterparts
and all of such counterparts, taken together, shall constitute one Agreement.
13.14 Headings. Any headings preceding the text of the several paragraphs
hereof are inserted solely for the convenience of reference and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the day and year first above written.
Signed, Sealed and Delivered
in the presence of:
____________________________________, P.C. By: Name: Title: By:
[Full Name] By:
[Full Name] By:
[Full Name] By:
[Full Name] By:
[Full Name] By:
[Full Name] By:
[Full Name] By:
[Full Name]
EXHIBIT A
Stock Purchase Agreement
This Stock Purchase Agreement, dated as of the ___ day of _________, 20__, by
and between ______________, _______________, _______________, _____________ &
____________, P.C. a _______________ professional service corporation (together
with its successors and assigns, however named, hereinafter referred to as the
"Corporation"), and __________________ (the "Purchaser").
WITNESSETH:WHEREAS, the Corporation desires to issue and sell __________ shares (the
"Shares") of the Corporation's common stock, par value $_____ per share (the
"Corporate Stock") upon the terms and conditions set forth herein;
WHEREAS, the Purchaser is licensed to practice law in the State of
_____________ and desires to purchase the Shares from the Corporation upon the
terms and conditions set forth herein; and
WHEREAS, simultaneously with the execution hereof, the Purchaser is
entering into that certain Amended and Restated Shareholder's Agreement, dated
the date hereof (the "Shareholders' Agreement").
NOW, THEREFORE, in consideration of the representations and covenants
contained herein, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Recitals. All of the statements hereinabove contained are true and
correct in all respects, and are incorporated herein by reference.
2. Defined Terms. All capitalized terms set forth herein and not otherwise
defined shall have the meanings set forth in the Shareholders' Agreement.
3. Purchase and Sale of Shares.(a) The purchase price of the Shares (the "Purchase Price") shall be
an aggregate amount equal to the Book Value (as hereinafter defined) of the
Shares, as of the last day of the calendar month immediately following the
Corporation's decision to offer the Purchaser the right to purchase the Shares
(the "Valuation Date").
(b) The term "Book Value" shall mean the aggregate amount of assets
(including accounts receivable aged less than One-hundred Eighty (180) days))
plus work in process (which term shall include all billable time through such
effective date, whether then or subsequently recorded, but excluding the time
charged on any contingent fee cases), less Twelve Percent (12%) for adjustments,
minus the aggregate amount of liabilities (excluding liabilities for expenses
ultimately chargeable to clients but not yet billed) appearing on the books and
records of the Corporation as of _______________, 20__, divided by the number of
outstanding shares of Corporate Stock after the sale of the Shares, which
computation shall be made by the independent accountant then engaged by the
Corporation using generally accepted accounting principles, consistently applied
and/or with appropriate adjustments for changes in principles or methodologies
from prior periods. For purposes of this computation, it is agreed that the
aggregate accounts receivable aged less than One-hundred Eighty (180) days for
the Corporation shall be reduced by estimated bad debts which is calculated at
the end of the previous calendar year in accordance with practices consistent
with those employed in prior periods.
4. Closing. (a) The closing ("Closing") of the sale and purchase of the Shares
shall take place at the offices of the Corporation no later than Forty Five (45)
days from the date that the Purchase Price is determined in accordance with
Section 2(a) above. At the Closing, the Corporation shall execute and deliver a
certificate representing the Shares to the Purchaser titled as designated by the
Purchaser. The Purchaser shall pay by cash or its equivalent the Purchase Price
for the Shares over a Five (5) year period commencing on the date hereof, which
payment shall involve the automatic application of the Purchaser's additional
annual bonuses awarded to him by the Corporation. [In special recognition of the
outstanding contributions and efforts of the Purchaser, and provided that the
Purchaser remains employed by the Corporation, the Corporation shall extend to
the Purchaser additional annual bonuses which shall be available to be used and
shall be used by the Purchaser for the purpose of completing the payment of the
Purchase Price. At the Corporation's election, the Purchaser shall execute and
deliver a non-recourse promissory note or installment purchase contract
reflecting the Purchaser's future obligation to apply any additional annual
bonuses to the remaining unpaid balance of the Purchase Price.(b) Should the Purchaser no longer be employed by the Corporation
within Two (2) years of the date of this Agreement, it is agreed that,
irrespective of its then book value, the Corporation shall repurchase the Shares
from the Purchaser at an aggregate price equal to _______________ Dollars
($________). Upon the Corporation's tendering a check in such amount to the
Purchaser, the Shares shall be automatically redeemed and become treasury
shares. The Purchaser shall not be entitled to receive compensation of any kind
for any amounts previously paid by the Purchaser for the Shares by application
of additional annual bonuses. All obligations of the Purchaser to pay the
remaining unpaid balance of the Purchase Price, if any, shall be cancelled, and
the books and records of the Corporation shall be made to reflect such
redemption, notwithstanding any contrary provisions in this Agreement or the
Shareholders' Agreement. (c) Should the Purchaser purchase additional shares of Corporate
Stock prior to the Second (2nd) anniversary of this Agreement other than the
Shares ("Other Stock"), or should the Purchaser cease being employed by the
Corporation after the Second (2nd) anniversary of this Agreement, the purchase
or redemption of his Other Stock or all of his Corporate Stock after the second
anniversary of this Agreement shall be on the same terms as for other
Shareholders, and shall be computed on the basis of the Book Value and the
Deferred Value. For each contingent fee matter being handled or participated in
by the Corporation, the Corporation shall compute its Total Resource Investment
as of any Valuation Date hereunder and its Total Resource Investment from such
Valuation Date until the conclusion of the matter. The Deferred Value due any
Shareholder shall be paid as soon as practicable to such Shareholder, their
Personal Representative or estate, after the conclusion of a contingent fee
matter, and irrespective of the fact that the Shareholder is no longer employed
by the Corporation. The effect of any special compensation arrangements or
policies adopted, maintained or placed into effect by the Corporation from time
to time, such as guaranteed or minimum shares for originating and/or
successfully handling contingent fee matters, shall be taken into account and
the premium portion paid thereunder shall be deducted from the total fee earned
for the purposes of computing any Shareholder's Deferred Value. In any case in
which the percentage intere
