Fill and Sign the Shareholders PDF Form

Shareholders’ Agreement with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder should the Beneficiaries of the Deceased Shareholder Desire to Sell such Shares Agreement made this _________________ (date) , between _______________________ (Name of Corporation) , a corporation organized and existing under the laws of ________________ (name of state) , with its principal office located at _____________________________________________________________ ________________ (street address, city, state, zip code) , referred to herein as Corporation ; _____________________ (Name of First Shareholder) , of ___________ _____________________________________________________________________ (street address, city, state, zip code) , referred to herein as First Shareholder ; and _________________________ (Name of Second Shareholder) , of _______________ ______________________________________________________________ (street address, city, state, zip code) , referred to herein as Second Shareholder . Whereas, Corporation is authorized to issue ________ (number) shares of common stock, with a $____________ par value per share. __________ (Number) of shares of common stock are issued, outstanding, and are owned by Shareholder as follows: __________________________ _________________________ (Name of First Shareholder) (Number of Shares) __________________________ __________________________ (Name of Second Shareholder) (Number of Shares) Whereas, the parties deem it in their best interest, and in the best interest of the Corporation, to provide some restrictions on the transfer, purchase, and ownership of the stock of the Corporation; Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Definitions: The following definitions apply to this Agreement: A. Closing means the date of purchase and sale of stock pursuant to this Agreement. B. Sale Date means the date triggering a purchase and sale under this Agreement. 2. Issuance and Transfer of Stock - 1 - All stock owned currently or acquired after execution of this Agreement shall be issued, held, and transferred pursuant to the terms of this Agreement. Shareholders agree not to dispose of or transfer any stock owned now or in the future except as provided in this Agreement. Any disposal or transfer of stock in violation of this Agreement is ineffective. 3. Stock Certificate Legend Stock certificates for stock issued by Corporation to a shareholder must contain the following legend: The shares of stock represented by this certificate are held pursuant to the provisions of a Shareholders’ Agreement executed on __________________ (date) . All transfers of ________________________________ (Name of Corporation) stock are subject to the terms of such Shareholders’ Agreement. A copy of the Shareholders’ Agreement is on file in the office of the Secretary of the Corporation. 4. Transfer of Stock during Life of Shareholder A. A Shareholder shall give written notice to Corporation and to remaining Shareholder within ____ days of receiving a third party's bona fide written offer, which the Shareholder plans to accept, to purchase any portion of the Shareholder's stock. B. Remaining Shareholder have the right to purchase the stock for which the offer was made in proportion to the number of shares then owned by remaining Shareholder. Remaining Shareholder may avail himself of this right by giving written notice to the selling Shareholder of his election to buy within _____ days of receiving notice of intent to sell. If Remaining Shareholder fails to purchase such Selling Shareholder's shares of offered stock, Corporation shall have the right to purchase the offered stock. Remaining Shareholder and Corporation may take any action required to enable Corporation to purchase Selling Shareholder's stock under the terms of this Agreement, including creation of a surplus. 1. Either the Remaining Shareholder or Corporation may avail themselves of the right to purchase offered stock by giving notice of that election to the Selling Shareholder within ______ days of receipt of the notice given pursuant to Paragraph A of this Section 4 . 2. Purchases and sales pursuant to this Paragraph B shall be at the prices and terms set forth in the original offer. In a sale of stock by a Shareholder to Corporation, the sale price shall increase or decrease by an amount equal to any indebtedness owed Selling Shareholder by Corporation, or any indebtedness owed to Corporation by Selling Shareholder. 3. The Selling Shareholder may not participate in determining whether - 2 - Corporation will purchase any portion of the offered stock. 4. If all offered stock is not purchased by Remaining Shareholder or Corporation pursuant to the provisions of this Agreement, the offered stock may then be sold by the Selling Shareholder to the third party at the price and terms in that party's offer. 5. A Selling Shareholder may not sell stock at a price or term that differs from the original offer without first reoffering the offered stock to Remaining Shareholder and Corporation pursuant to the procedures set forth in this Section. 6. In the event of a sale of stock from a Shareholder to another Shareholder or to Corporation, Closing shall occur at a time mutually agreed on by the parties to the sale. However, Closing may not occur later than ____ days from the sale date. On the sale date, the Selling Shareholder shall deliver the stock to the agreed upon escrow agent representing Corporation. The agent shall hold the stock until full payment is made, and shall then deliver the stock to the purchaser. C. If offered stock is not purchased by the third party pursuant to this Section within ____ days from the date of Selling Shareholder's receipt of the third party's offer, the offer shall be deemed to have expired. If Selling Shareholder's still wishes to accept the third party's offer, the offered stock must be reoffered to remaining Shareholder and Corporation pursuant to the procedures outlined in this Section. D. Any person acquiring offered stock from a Shareholder shall become bound by the terms of this Agreement immediately after acquiring the interest in stock of Corporation. Transfer of the offered stock on Corporation's books shall not be accomplished until a copy of this Agreement is executed by the acquiring person. However, failure or refusal to sign this Agreement shall not relieve any person acquiring an interest in Corporation's stock from the obligations set forth in this Agreement. E. On sale of all stock owned by a Shareholder, all interests of such Shareholder with respect to the stock sold shall terminate, and such Shareholder shall resign as an officer or director of Corporation effective no later than the closing date of the sale. 5. Transfers of Stock after Shareholder Death Upon the death of a Shareholder, if the b eneficiaries of said Shareholder desire to sell the shares in the Corporation owned by said Shareholder at the time of his death, the Corporation shall have the first right of refusal to purchase said deceased Shareholder’s shares within Ninety (90) days following the qualification of the executor or administrator of said deceased Shareholder’s estate, for an amount equal to six times - 3 - the amount of the net income of the Corporation based on an average of the past two years. If said Corporation does not exercise this first right of refusal within said Ninety (90) day period, said beneficiaries may sale such shares to any third party at any price acceptable to them. 6. Noncompetition in Case of Sale by Shareholder Selling Shareholder shall, on Closing Date, execute an agreement as follows: A. Definitions. As used in this Section, the following terms have the following meanings: 1. Confidential Information means (i) any information with respect to Corporation’s customers, accounts, costs, plans, business policies, programs, formulae, products, know-how, trade secrets, suppliers, pricing policies or rates, marketing techniques, or any other information which may now or in the future be considered by Corporation to be confidential or proprietary, (ii) reports, memoranda, correspondence, and other writings belonging to Corporation, which may have been produced by or come into the possession of Selling Shareholder in the course of his involvement with the Corporation as a shareholder, officer, director, or employee, excluding any of the foregoing which is in the public domain. 2. Territory means the following area: (describe) _______________ ___________________________________________________________ __________________________________________________________ . B. Selling Shareholder does hereby covenant and agree that for a period ______ (number) years after the Closing Date, Selling Shareholder shall not, directly or indirectly (as agent, consultant or otherwise) compete in any way with the business of Corporation throughout the Territory. C. Selling Shareholder will not, at any time, disclose any such Confidential Information of Corporation to any person, except as required by law. Selling Shareholder acknowledges that the Confidential Information of the Corporation is material to the value of the Corporation, and is unique, and agrees that disclosure thereof in violation of this Agreement may irreparably damage the value of the Corporation. D. It is the intent of the parties that the provision of this Section 6 shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, to the extent that the non-competition restrictions hereunder shall be adjudicated to be invalid or unenforceable in any such jurisdiction, the court making such determination shall have the power to limit, construe or reduce the duration, scope, activity and/or area of such provision, and/or delete specific words or phrases to the extent necessary to render such provision enforceable to the - 4 - maximum reasonable extent permitted by applicable law, such limited form to apply only with respect to the operation of this Section in the particular jurisdiction in which such adjudication is made. E. Selling Shareholder acknowledges that his adherence to the terms of the covenants set forth in Section 6 are necessary to protect the value of the Corporation, that a continuing breach of such covenants will result in irreparable and continuing damage to the value of the Corporation, and that money damages would not adequately compensate Corporation for any such breach and, therefore, Corporation would not have an adequate remedy at law. In the event any action or proceeding shall be instituted by Corporation to enforce any provision of Section 6 , Selling Shareholder shall waive the claim or defenses in such action that (i) money damages are adequate to compensate the aggrieved party for such breach, and (ii) there is an adequate remedy at law available to the aggrieved party, and shall not urge in any such action or proceeding the claim or defense that such remedy at law exists. Corporation shall have, in addition to any and all remedies at law, the right, without posting of bond or other security, to an injunction, both temporary and permanent, specific performance and/or other equitable relief to prevent the violation of any obligation under Section 6 . Selling Shareholder agrees that the remedies of Corporation for breach of this Section 6 shall be cumulative, and seeking or obtaining injunctive or other equitable relief shall not preclude the making of a claim for damages or other relief. The parties to this Agreement also agree that Corporation shall be entitled to such damages as Corporation can show it has sustained by reason of such breach. In any action brought to enforce the covenants set forth in Section 6 , or to recover damages for breach thereof, the prevailing party shall be entitled to recover reasonable attorneys' fees and other expenses of litigation, together with such other and further relief as may be proper. 7. Severability The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision. 8. No Waiver The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred. 9. Governing Law This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of ______________. - 5 - 10. Notices Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement. 11. 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. 12. Mandatory Arbitration Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect. 13. 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. 14. Modification of Agreement Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party. 15. Assignment of Rights The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party. 16. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine. WITNESS our signatures as of the day and date first above stated. _________________________________ (Name of Corporation) - 6 - By: ____________________________ _______________________________ ___________________________ (P rinted Name of First Shareholder) (P rinted Name & Office in Corporation) _______________________ ___________________________ (Signature of First Shareholder) (Signature of Officer) ____________________________ (P rinted Name of Second Shareholder ) ____________________________ (Signature of Second Shareholder) - 7 -