Shareholders Buy Sell Agreement of Stock in a Close
Corporation with Noncompetition Provisions
This Shareholders Agreement is made by and among _____________________ (Name
of Shareholder Alpha) of _________________________________________ (street
address, city, state, zip code), referred to herein as Alpha , _____________________
(Name of Shareholder Beta of _________________________________________
(street address, city , state, zip code), referred to herein as Beta, and
_____________________ (Name of Shareholder Gamma , of
_________________________________________ (street address, city, state, zip
code), referred to herein as Gamma, Alpha, Beta and Gamma and any subsequent
person or entity holding common stock of the Company hereinafter being sometimes
referred to individually as a Shareholder and collectively as the Shareholders, and
_____________________ (Name of Corporation), a corporation organized and existing
under the laws of the state of _____________________ (name of state), with its
principal office located at _________________________________________ (street
address, city, state, zip code) , referred to herein as the Company;
Whereas, in order to insure the harmonious and successful management and control of
the Company, and to provide for an orderly and fair disposition of shares of common
stock of the Company now or hereafter owned by any Shareholder;
Now, for and in consideration of the mutual covenants contained in this Agreement,
and other good and valuable consideration, the parties agree as follows:
I. Definitions.
A. Offering Shareholder means any Shareholder, or his personal
representatives, heirs, administrators, and executors, as the case may be, who
pursuant to this Agreement must or does offer all or any of his Shares to the
Company or the Continuing Shareholders.
B. Continuing Shareholders means all Shareholders other than an Offering
Shareholder.
C. Shares means shares of Common Stock of the Company now or
hereafter owned by any Shareholder.
D. Buyer means the Company or those Continuing Shareholders who
purchase an Offering Shareholder's Shares pursuant to this Agreement.
E. Management Shareholder means Alpha, Beta and Gamma.
F. Non-management Shareholder means any Shareholder other than a
Management Shareholder.
II. Purchase for Investment. Each Shareholder represents and warrants that he is
acquiring and has acquired his Shares for his own account for investment and not with a
view to, or for resale in connection with, any distribution thereof or with any present
intent of selling any portion thereof.
III. Transfers of Shares. A Shareholder may not transfer, give, convey, sell, pledge,
bequeath, donate, assign, encumber or otherwise dispose of any Shares except
pursuant to this Agreement.
A. Transfers to the Company. Notwithstanding anything to the contrary
contained in this Agreement, a Shareholder may give, sell, transfer or otherwise
dispose of all or any of his Shares to the Company at such price and on such
terms and conditions as such Shareholder and the Board of Directors of the
Company may agree.
B. Transfer to Others. Except as provided for in Paragraph III(A) above, a
Shareholder desiring to dispose of some or all of his Shares may do so only
pursuant to a bona fide offer to purchase (the Offer ) and after compliance with
the following provisions. Such Shareholder shall first give written notice to the
Company and the other Shareholders of his intention to dispose of his Shares,
identifying the number of Shares he desires to dispose of, the proposed
purchase price per Share and the name of the proposed purchaser and attaching
an exact copy of the Offer received by such Shareholder.
1. The Company's Right to Purchase. The Company shall have the
exclusive right to purchase all of the Shares which the Offering
Shareholder proposes to sell at the proposed purchase price per Share.
The Company shall exercise this right to purchase by giving written notice
to the Offering Shareholder (with a copy thereof to each of the Continuing
Shareholders) within thirty (30) days after receipt of the notice from the
Offering Shareholder (the 30 Day Period ) that the Company elects to
purchase the Shares subject to the Offer and setting forth a date and time
for closing which shall be not later than ninety (45) days after the date of
such notice from the Company. At the time of closing, the Offering
Shareholder shall deliver to the Company certificates representing the
Shares to be sold, together with stock powers duly endorsed in blank. The
Shares shall be delivered by the Offering Shareholder free of any and all
liens and encumbrances. All transfer taxes and documentary stamps shall
be paid by the Offering Shareholder.
2. The Continuing Shareholders Right to Purchase. If the
Company fails to exercise its right to purchase pursuant to Subparagraph
1 above, the Continuing Shareholders shall have the right for an additional
period of thirty (30) days (the Additional 30 Day Period ) commencing at
the expiration of the 30 Day Period to purchase the Shares which the
Offering Shareholder proposes to sell at the proposed purchase price per
Share. The Continuing Shareholders shall exercise this right to purchase
by giving written notice to the Offering Shareholder prior to the expiration
of the Additional 30 Day Period that they elect to purchase his Shares and
setting forth a date and time for closing which shall be not later than ninety
(90) days after the expiration of the Additional 30 Day Period. Any
purchase of Shares by all or some of the Continuing Shareholders shall be
made in such proportion as they might agree among themselves or, in the
absence of any such agreement, pro rata in proportion to their ownership
of Shares of the Company (excluding the Offering Shareholder's Shares)
at the time of such offer, but in any event one or more of the Continuing
Shareholders must agree to purchase all the Shares which the Offering
Shareholder proposes to sell. At the time of closing, the Offering
Shareholder shall deliver to Buyer certificates representing the Shares to
be sold, together with stock powers duly endorsed in blank. Said Shares
shall be delivered by the offering Shareholder free and clear of any and all
liens and encumbrances. All transfer taxes and documentary stamps shall
be paid by the Offering Shareholder.
3. Performance of Acceptance. When exercising the rights granted
in Paragraphs III(B)(1) and (2) hereof, Buyer must elect to purchase all
Shares which the Offering Shareholder proposes to sell for the price and
upon the same terms for payment of the price as are set forth in the Offer;
provided, however, that if said offer received by the Offering Shareholder
shall provide for any act or action to be done or performed by the party
making such Offer at any time before or within thirty (30) days after the
last day for exercise of Buyer's right to purchase pursuant to Paragraphs
III(B)(1) and (2) hereof, then the Buyer shall be deemed to have complied
with the terms and conditions of such Offer if Buyer does or performs such
act or action within thirty (30) days after the last day for exercise of Buyer's
right to purchase pursuant to Paragraphs III(B)(1) and (2) hereof.
4. Sale to Third Party. If either the Company or some or all of the
Continuing Shareholders do not elect to purchase all of the Shares which
the Offering Shareholder proposes to sell, the Offering Shareholder may
accept the Offer which the Offering Shareholder mailed with his notice to
the Company pursuant to Paragraph III(B) hereof and transfer all (but not
less than all) of the Shares which he proposes to sell pursuant thereto on
the same terms and conditions set forth in such Offer, provided that any
transferee of such Shares shall be bound by this Agreement as provided
by Paragraph XI hereof, and further provided that if such sale is not
completed within one hundred twenty (120) days after the date notice is
received by the Company under Paragraph III(B) hereof, all such Shares
shall again become subject to the restrictions and provisions of this
Agreement.
5. Right of Co-Sale. Notwithstanding any other provision hereof, in
the event the Offering Shareholder receives an Offer from an unaffiliated
third party (the Offeror ) to purchase from such Shareholder not less than
20% of the Shares owned by such Shareholder and such Shareholder
intends to accept such Offer, the Offering Shareholder shall, after
complying with the provisions of Paragraph III(B)(1) and (2) above and
before accepting such Offer, forward a copy of such Offer to the Company
and each of the Continuing Shareholders. The Offering Shareholder shall
not sell any such Shares to the Offeror unless the terms of the Offer are
extended by the Offeror to the Continuing Shareholders pro rata in
proportion to their ownership of Shares of the Company (excluding the
Offering Shareholder's Shares) at the time of such Offer. The Continuing
Shareholders shall have ten (10) days from the date of the foregoing Offer
to accept such Offer.
C. Paragraphs III(B)(1) and (2) may each during their lifetimes transfer all,
hut not less than all, of their Shares to said Shareholder's spouse or a lineal
descendant of such Shareholder, so long as prior to such transfer (i) such
person, the Company, and all the Shareholders amend this Agreement to the
reasonable satisfaction of such person, the Company and all the Shareholders to
provide the parties to this Agreement with the rights, remedies and effect
provided in this Agreement as if no such transfer had occurred, and (ii) the
proposed transferee agrees in a writing satisfactory to the Company and all
Shareholders that such person shall vote for Alpha, Beta and Gamma (or their
nominees) as directors of the Company in accordance with Paragraph XIV hereof
and shall be bound by all the terms and conditions of this Agreement.
IV. Right of First Refusal.
A. Except in the case of Excluded Securities (as defined below), the
Company shall not issue, sell or exchange, agree to issue, sell or exchange, or
reserve or set aside for issuance, sale or exchange, any (i) shares of Common
Stock or any other equity security of the Company which is convertible into
Common Stock or any other equity security of the Company, (ii) any debt
security of the Company which is convertible into Common Stock or any other
equity security of the Company, or (iii) any option, warrant or other right to
subscribe for, purchase or otherwise acquire any equity security or any such debt
security of the Company, unless in each case the Company shall have first
offered to sell to each Shareholder, pro rata in proportion to such Shareholder's
then ownership of Shares of the Company, such securities (the O ffered
Securities ) (and to sell thereto such Offered Securities not subscribed for by the
other Shareholders as hereinafter provided), at a price and on such other terms
as shall have been specified by the Company in writing delivered to such
Shareholder (the Stock Offer ), which Stock Offer by its terms shall remain open
and irrevocable for a period of 10 days (subject to extension pursuant to the last
sentence of Subsection B below) from the date it is delivered by the Company
to the Shareholder.
B. Notice of each Shareholder's intention to accept, in whole or in part, a
Stock Offer shall be evidenced by a writing signed by such Shareholder and
delivered to the Company prior to the end of the 10-day period of such Stock
Offer, setting forth such portion of the Offered Securities as such Shareholder
elects to purchase (the Notice of Acceptance ). If any Shareholder shall
subscribe for less than his pro rata share of the Offered Securities to be sold, the
other subscribing Shareholders shall be entitled to purchase the balance of that
Shareholder's pro rata share in the same proportion in which they were entitled to
purchase the Offered Securities in the first instance (excluding for such purposes
such Shareholder), provided any such other Shareholder elected by a Notice of
Acceptance to purchase all of his pro rata share of the Offered Securities. The
Company shall notify each Shareholder within five (5) days following the
expiration of the ten (10)-day period described above of the amount of Offered
Securities which each Shareholder may purchase pursuant to the foregoing
sentence, and each Shareholder shall then have ten (10) days from the delivery
of such notice to indicate such additional amount, if any, that such Shareholder
wishes to purchase.
C. In the event that Notices of Acceptance are not given by the Shareholders
in respect of all the Offered Securities, the Company shall have 120 days from
the expiration of the foregoing 10-day or 25-day period, whichever is applicable,
to sell all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Shareholders (the Refused Securities ) to
any other person or persons, but only upon terms and conditions in all respects,
including, without limitation, unit price and interest rates, which are no more
favorable, in the aggregate, to such other person or persons or less favorable to
the Company than those set forth in the Stock Offer. Upon the closing, which
shall include full payment to the Company, of the sale to such other person or
persons of all the Refused Securities, the Shareholders shall purchase from the
Company, and the Company shall sell to the Shareholders the Offered Securities
in respect of which Notices of Acceptance were delivered to the Company by the
Shareholders, at the terms specified in the Stock Offer.
D. In each case, any Offered Securities not purchased by the Shareholders
or other person or persons in accordance with Section IV(C) may not be sold or
otherwise disposed of until they are again offered to the Shareholders under the
procedures specified in Sections IV(A), (B) and (C).
E. The rights of the Shareholders under this Section IV shall not apply to the
following securities (the Excluded Securities ):
1. Any (a) shares of Common Stock or any other equity security of the
Company which is convertible into Common Stock or any other equity
security of the Company, (b) debt security of the Company which is
convertible into Common Stock or any other equity security of the
Company, or (c) option, warrant or other right to subscribe for, purchase or
otherwise acquire any equity security or any such debt security of the
Company (collectively, an Equity Security ) if the issuance of such Equity
Security does not alter the respective proportions of ownership (on a fully
diluted basis) by Alpha, Beta and Gamma , as among themselves, of
Equity Securities immediately prior to the issuance of such Equity
Security;
2. Common Stock issued as a stock dividend or upon any stock split
or other subdivision or combination of the outstanding shares of Common
Stock;
3. Securities issued pursuant to the acquisition by the Company of
another corporation to the stockholders of such other corporation by
merger or purchase of substantially all of the assets whereby the
Company owns not less than 51% of the voting power of such other
corporation; and
4. Common Stock issued in connection with a firm underwritten public
offering of shares of Common Stock, registered pursuant to the Securities
Act.
V. Sale or Redemption upon Termination of Employment or Upon Disability or
upon Death. Upon the termination of a Management Shareholder's employment or
other relationship with the Company (including without limitation, any position as an
officer, director, consultant, joint venturer, independent contractor, or promoter to or of
the Company) for whatever reason, the Disability (as defined below) of a Management
Shareholder, or the death of a Management or Non-management Shareholder (any
such event hereinafter a Triggering Event ), such Shareholder (or his heirs, executors,
guardian or personal representative) within sixty (60) days after the Triggering Event
shall offer to sell all, but not less than all, of the Shares owned by the Shareholder. Each
offer shall be made to the Company in writing and shall exist for a period of ninety (90)
days after such offer has been received by the Company. If the Company fails to
purchase all of the Shares offered, the offer to sell shall be made in writing to all of the
Continuing Shareholders in such proportion as the Continuing Shareholders may agree
among themselves, or in the absence of agreement, pro rata in proportion to their then
ownership of Shares of the Company (excluding the Offering Shareholder's Shares),
and shall exist for a period of ninety (90) days after the offer has been received by all of
the Continuing Shareholders. For purposes of this Agreement, Disability of a particular
person means the inability, due to a physical or mental condition, of such person to
maintain his employment or other relationship with the Company (including without
limitation, fulfilling his duties in any position as an officer, director, consultant, joint
venturer, independent contractor, or promoter to or of the Company) or to conduct his
normal daily activities on behalf of the Corporation for any six (6) consecutive month
period.
VI. Purchase Price. The purchase price for all Shares purchased pursuant to
Paragraph V hereof shall be determined as follows:
A. The Company or the Continuing Shareholders, as the case may be, within
thirty (30) days after receipt of any offer referred to in Paragraph V above, shall
notify the Offering Shareholder of the price at which the Company or the
Continuing Shareholders, as the case may be, are willing to purchase the
Shares.
B. In the event the Offering Shareholder objects to the purchase price
established in accordance with Paragraph VI (A) above, the Offering
Shareholder shall have the right to solicit offers to buy the Shares in accordance
with the provisions of Paragraph III (B) of this Agreement. The right to solicit
offers shall be subject to the terms and conditions of Paragraph III(B) and (C)
hereof, including without limitation, the rights of first refusal and co-sale and the
period during which any right of first refusal must be exercised but shall not be
subject to the one hundred twenty (120) day period referred to in Paragraph III
(B)(4) of this Agreement.
VII. Payment of Purchase Price. The purchase price for all Shares purchased
pursuant to Paragraph V hereof shall be paid at the closing of the sale.
VIII. Noncompetition Agreement. No party will be engaged, employed,
concerned, or financially interested, directly or indirectly, in the same or
similar businesses that are being conducted by Company within the
geographical boundaries of the state of _____________________ (name of
state) (the Jurisdiction ), nor shall he in any way compete with Company
within said Jurisdiction.
IX . Put and Call Options.
A. Put and Call Options. Each Shareholder shall have the right and option
upon the written declaration (a Declaration ) by such Shareholder to the other
Shareholders and the Company of the occurrence of an impasse (as defined
below) to sell to the Continuing Shareholders all of his Shares, and the
Continuing Shareholders shall have the obligation to either (i) purchase all of
such Shares owned by the offering Shareholder in such proportion as the
Continuing Shareholders may agree upon, and if they cannot so agree, pro rata
in proportion to their then ownership of Shares of the Company (excluding the
Offering Shareholder's Shares) or (ii) if the Continuing Shareholders are unable
or unwilling to purchase all of the Shares owned by the Offering Shareholder, sell
all of their Shares to the Offering Shareholder, and the Offering Shareholder shall
have the obligation to buy such Shares.
B. Impasse. An impasse shall be conclusively evidenced by (i) either Alpha,
Beta and Gamma , or their respective representative, voting opposite the others
at a vote at a shareholders meeting or at a vote at a meeting of the Board of
Directors of the Company (or failing to attend such meetings upon due notice if
such failure results in the lack of a quorum making such vote impossible), which
vote is on a material issue, not in the ordinary course of business, and affecting
the business, assets or operations of the Company, including, but not limited to, a
proposal to merge, liquidate, consolidate or dissolve the Company, or to sell,
lease or dispose of all or substantially all of the assets of the Company or to
amend the substantive provisions of the Company's bylaws or articles of
incorporation, or to issue or redeem stock, or to declare dividends of any kind,
and (ii) either Alpha, Beta and Gamma notifying the others and the Company
and any other Shareholders within thirty (30) days after such meeting, proposed
meeting or vote than an impasse has occurred. The put and call rights granted to
each Shareholder under this Paragraph IX are independent of the other rights
granted to the Shareholders and the Company under the other terms of this
Agreement and such rights are not mutually exclusive or inconsistent.
C. Exercise of Option. The Continuing Shareholders shall exercise any
option provided for in this Paragraph IX within thirty (30) days after receipt of a
declaration. Any closing of the sale of Shares pursuant to such exercise shall
occur within ninety (90) days after receipt of a Declaration.
D. Purchase Price. Any purchase or sale of Shares sold pursuant to this
Paragraph IX shall be at the price as set forth in the Declaration delivered by the
Shareholder exercising his right to sell his shares and shall be paid at the closing
of the sale of the Shares.
X. Rights upon Registration. In the event that the Company shall register or
qualify any or all of the common stock of the Company under the Securities Act of
1933, as amended (or any similar statute then in force), on an appropriate registration
statement, the Company shall give the Shareholders written notice thereof, and upon
written request of a Shareholder, received by the Company not later than fifteen (15)
days after receipt by the Shareholder of such notice, the Company will include in the
registration statement filed by the Company with the Securities and Exchange
Commission all Shares held by such Shareholder with respect to which the Shareholder
shall have so requested registration.
XI. Agreement Binding on All Persons Interested in Shares. Each person who
now or hereafter acquires any legal or equitable interest in any Shares shall be bound
by the terms of this Agreement. No issuance or transfer of Shares shall be effective and
the Company shall not enter any issue or transfer upon the stock books of the Company
or issue a certificate in the name of any person unless the Company is satisfied that
such person is, and in a manner satisfactory to the Company has acknowledged being,
bound by this Agreement.
XII. Closing. Except as otherwise agreed to or expressly provided for herein, closing
pursuant to the exercise of a right to purchase or sell Shares pursuant to this Agreement
shall be held at the principal executive offices of the Company.
XIII. Entry of Legend upon Stock Certificates. The following legend shall he
immediately entered on each stock certificate representing Shares owned by the
Shareholders:
The gift, sale, mortgage, pledge, hypothecation or other encumbering or
transfer of the shares of the capital stock represented by this certificate
is restricted in accordance with the terms and conditions of a Shareholders
Agreement dated the day of 1996, a copy of which is on file at the principal
executive offices of the Company. Said Shareholders Agreement restricts
the ability of the Shareholder to sell, give, pledge, bequeath or otherwise
transfer or dispose of this stock certificate and the shares of capital stock
represented by it.
XIV. After Acquired Shares -- Subsequent Shareholders. The terms and conditions
of this Agreement shall specifically apply not only to Shares owned by Shareholders at
the time of execution of this Agreement, but also to any Shares acquired by any
Shareholder subsequent to such execution.
XV. Board of Directors. At each election of the Board of Directors of the Company,
the Shareholders shall vote their Shares to elect three directors of the Company, one
director being Alpha, or his nominee, one director being Gamma, or his nominee, and
one director being Beta, or his nominee.
XVI. Community and Marital Property Laws. Notwithstanding anything to the
contrary contained herein, the following terms shall control to the extent community
property laws or other marital property laws apply to the Shares of any Shareholder:
A. Lifetime Transfers. The provisions of this Agreement regarding
restrictions against the transfer of Shares shall apply to any interest of the
spouse of any Shareholder in such Shares (said spouse is hereinafter referred to
as a Spouse).
B. Transfers upon Death of Spouse. If the Spouse of a Shareholder
predeceases such Shareholder and has failed to bequeath to such Shareholder
the deceased Spouse's entire marital property interest, if any, in the Shares held
by the Shareholder, or if the Spouse of a Shareholder is adjudicated to be
bankrupt or insolvent, or makes an assignment for the benefit of his or her
creditors (collectively referred to herein as an Event ), then to the extent
necessary to divest the Spouse of any interest in the Shares of such Stockholder,
within three months after the date of the occurrence of the Event, the
Shareholder shall have the option to and must purchase such marital property
interest of his or her Spouse or the estate of the deceased Spouse, as the case
may be, in the Shares held by the Shareholder at a price equal to the lesser of
either the value of the spouse's marital property interest in such Shares or the
book value of such Shares.
C. Marital Dissolution. Any decree of dissolution, separate maintenance
agreement or other property settlement between a Shareholder and his or her
Spouse shall provide that the entire marital property interest of the Spouse in the
Shares of the Shareholder shall be granted to the Shareholder as part of the
division of the property of the marriage and the Spouse shall release and the
Shareholder shall accept any marital property interest of such Spouse in the
Shares. If payment for such Shares is ordered by the Court or demanded by the
Spouse, no consideration shall be required, but if the Shareholder volunteers
consideration for said release of interest it shall be no greater than the lesser of
either the value of the Spouse's marital property interest in such Shares or the
book value of the Spouse's marital property interest in such Shares.
D. Inclusion of Marital Property. Any purchase of the Shares of a
Shareholder pursuant to any provision of this Agreement shall include without
limitation or condition the entire marital property interest of the Spouse of such
Shareholder in the Shares being purchased.
E. Determination of Value. Book value and the value of a Spouse's interest
in the Shares of a Shareholder for purposes of this Paragraph XVI shall be
determined by the Shareholder. The Company and the other Shareholders shall
not be responsible for the determination of the value of the marital property
interest of any Spouse of a Shareholder, the determination of book value, or the
purchase of or payment for such Spouse's marital property interest in the Shares
of a Shareholder.
XVII. Insurance. The Company may, if it so desires, purchase insurance policies on
the life of any Management Shareholder for the purpose of payment for stock purchases
or as key man insurance. If any Shareholder on whose life the Company owns an
insurance policy shall at any time during his lifetime sell all of his Shares, then that
Shareholder shall have the right to purchase from the Company the insurance policy or
policies on his life at the cash surrender value, if any. The Company shall deliver the
policy or policies on the life of such Shareholder upon payment of the cash surrender
value, if any, end shall execute any necessary instruments of transfer and change of
beneficiary forms.
XVIII. Subchapter S Election . The Company may elect to be taxed as a small
business corporation under Subchapter S of the Internal Revenue Code, as amended
from time to time (the Code ), or such other provisions of law as may hereafter be
applicable to such an election, and for state income tax purposes, if available
(hereinafter, an Election ). Each Shareholder and the Company agree to execute and
file the necessary forms for making and maintaining en Election, and each Shareholder
agrees to deliver to the Company the consent of the spouse of such Shareholder if such
consent is required for the Election under any community or marital property laws or
otherwise. The Shareholders and the Company agree that they will take such other
actions as may be deemed necessary or advisable by counsel to the Company to
exercise or maintain the Election. The Shareholders shall maintain the Election unless
the Management Shareholders unanimously agree otherwise or in the event that the
Board of Directors requests that the Shareholders revoke the Election, in which case
the Shareholders shall promptly execute and deliver to the Company such documents
as may be necessary to revoke the Election. None of the Shareholders, without the
consent of all of the Management Shareholders, shall take any action or position, or
make any transfer or other disposition of his shares of the Company which may result in
the termination or revocation of the Election. In the event of an inadvertent termination
of the Election as described in Section 1362(f) of the Code or other applicable law, the
Shareholders shall agree to make such adjustments as may be required to continue the
Election, as provided in Section 1362(f)(4) of the Code or other applicable law.
XIX. Pro Rata Allocations. All items of income and loss of the Company shall be
assigned pro rata to each day throughout the year. However, the Shareholders hereby
consent to make an election pursuant to Section 1362(c)(3) of the Code or Section
1377(a)(2) of the Code in the event that the Board of Directors determines such
elections to be in the best interest of a majority of the Shareholders.
XX. Authorization. The Company is authorized to enter into this Agreement by virtue
of a resolution passed at a meeting of the Board of Directors.
XXI. Notices. Notices and declarations under this Agreement shall be in writing and
sent by registered or certified mail, return receipt requested, postage paid, to the
Company at its principal executive offices and to Shareholders at their last address as
shown on the records of the Company or at such other address with respect to any
party hereto as such party shall notify the other Shareholders and the Company in
writing in the manner specified herein.
XXII. Termination. The rights and obligations of the Company and the Shareholders
under this Agreement shall terminate upon written agreement of all then existing
Shareholders or upon the registration or qualification of any or all of the Common stock
of the Company pursuant to Paragraph X hereof.
XXIII. Severability. The various provisions of this Agreement are severable from each
other and from the other provisions of the Agreement, and in the event that any
provision in this Agreement shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the remainder of this Agreement shall be fully effective, operative
and enforceable.
XXIV. Free end Clear of Encumbrances. All Shares sold pursuant to the terms of this
Agreement shall be free of any and all liens and encumbrances and accompanied by
stock powers duly endorsed in blank.
XXV. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, personal representatives, executors,
administrators, successors and assigns.
XXVI. Gender. Pronouns used herein are to be interpreted as referring to both the
masculine and feminine gender.
XXVII. Governing Law. This Agreement shall be governed by, construed, and enforced
in accordance with the laws of the State of _____________________ (name of state).
XXIX. 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.
XXX. Mandatory Arbitration. Notwithstanding the foregoing, and anything herein to
the contrary, 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.
XXXI. 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.
WITNESS our signatures as of the ________ day of ________ 20 ________ .
______________________ _____________________ __________________
(Signature of Alpha) (Signature of Beta) (Signature of Gamma)
_________________ _________________ _________________
(P rinted Name of Alpha) (P rinted Name of Beta) (P rinted Name of
Gamma)
Spousal Consent to Shareholder Agreement
The undersigned being the spouse of Shareholder Alpha, one of the Shareholders
named in the foregoing Shareholders Agreement (the Agreement), hereby
acknowledges that:
I. I have read the foregoing Agreement in its entirety and understand that:
A. Upon the occurrence of certain events as specified in the Agreement, the
Company, my spouse, and the other Shareholders will have the right to and may
be obligated to purchase Shares owned by another Shareholder at a price and
on terms and conditions set forth in the Agreement;
B. Any purchase of the Shares of any Shareholder will include his or her
entire interest in such Shares and any community property interest and other
marital property interest of the spouse of such Shareholder; and
C. The Agreement imposes certain restrictions on any attempts by me to
transfer any interest I may have in the Company or any Shares of the Company
by virtue of my marriage and confers on my spouse the right and obligation to
purchase any interest I may have in the Company or any Shares of the Company
upon the occurrence of certain events.
II. I hereby approve and agree to be bound to all of the terms of the Agreement and
agree that any interest (community property or otherwise) that I may have in the
Company or any Shares of the Company shall be subject to the terms of this spousal
consent and the Agreement.
III. I agree that my spouse may join in any future amendments or modifications to
the Agreement without any notice to me and without any signature, acknowledgment,
agreement or consent on my part.
IV. I agree that I will transfer or bequeath any interest I may have in the Company or
any Shares of the Company by my will, outright and free of trust to my spouse.
V. I acknowledge that I have been advised and have been encouraged to seek
independent counsel of my own choosing to represent me in matters regarding the
Shareholders Agreement and my execution of this spousal consent.
VI. I hereby consent to the Company and my spouse making and maintaining the
Subchapter S Election (if applicable) under the Internal Revenue Code, as amended
from time to time.
WITNESS my signatures as of the ________ day of ________ 20 ________ .
___________________________________
(Signature of Spouse)
_____________________
(Printed Name of Spouse)
