Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-02569BG
• Format: Word; Rich Text

Description

A corporation whose shares are held by a single shareholder or a closely-knit group of shareholders (such as a family) is known as a close corporation. The shares of stock are not traded publicly. Many of these types of corporations are small firms that in the past would have been operated as a sole proprietorship or partnership, but have been incorporated in order to obtain the advantages of limited liability or a tax benefit or both. A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction. Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions In Alaska, a Shareholders' Agreement between two shareholders of a closely held corporation with buy-sell provisions is a legal document that outlines the rights, responsibilities, and obligations of the shareholders in a closely held corporation. This agreement is crucial in establishing a framework for the smooth and fair operation of the corporation, particularly in situations where one shareholder wants to sell their shares or in case of certain triggering events. There are different types of Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy-Sell Provisions, some of which include: 1. Cross-Purchase Agreement: This type of agreement allows the remaining shareholder(s) to purchase the shares of the departing shareholder in the event of certain triggering events, such as death, disability, retirement, or voluntary resignation. The agreement typically outlines the procedure for determining the purchase price, payment terms, and the allocation of shares among the remaining shareholders. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself agrees to redeem the shares of the departing shareholder. The agreement sets out the circumstances under which the redemption will occur, such as death, disability, or retirement, and outlines the method for valuing the shares and the terms of payment. 3. Hybrid Agreement: This agreement combines elements of both the cross-purchase and stock redemption agreements. It provides flexibility for either the remaining shareholders or the corporation to purchase the shares of the departing shareholder, depending on the triggering event. Key provisions typically included in an Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy-Sell Provisions: 1. Purchase Price Determination: The agreement will specify how the purchase price for the shares will be determined, such as through a formula, appraisal, or an agreed-upon price. This prevents disputes and ensures a fair valuation of the shares. 2. Payment Terms: The agreement will outline the terms of payment, whether it be in a lump sum, installments, or through the use of a promissory note. The payment terms should be clear and reasonable to both parties. 3. Triggering Events: The agreement will identify the triggering events that would activate the buy-sell provisions, such as death, disability, retirement, or voluntary resignation. It aims to protect the interests of both shareholders in the event of unexpected circumstances. 4. Restrictions on Transfer: The agreement may include restrictions on the transfer of shares to third parties, ensuring that shares can only be transferred within the closely held corporation and to the remaining shareholders. 5. Dispute Resolution: The agreement may include provisions for dispute resolution mechanisms, such as mediation or arbitration, to resolve any disagreements or conflicts that may arise between the shareholders. 6. Non-Compete and Confidentiality: The agreement may contain clauses that restrict shareholders from engaging in activities that may compete with the corporation or disclose confidential information to outsiders. It is essential for shareholders of closely held corporations to have a well-drafted Shareholders' Agreement with buy-sell provisions in place. These agreements provide certainty, protection, and fairness for both parties involved in case of unforeseen events or the desire to part ways. Seeking legal counsel to draft or review such agreements is advisable to ensure compliance with Alaska state laws and to meet the specific needs and circumstances of the shareholders and the corporation.

Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions In Alaska, a Shareholders' Agreement between two shareholders of a closely held corporation with buy-sell provisions is a legal document that outlines the rights, responsibilities, and obligations of the shareholders in a closely held corporation. This agreement is crucial in establishing a framework for the smooth and fair operation of the corporation, particularly in situations where one shareholder wants to sell their shares or in case of certain triggering events. There are different types of Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy-Sell Provisions, some of which include: 1. Cross-Purchase Agreement: This type of agreement allows the remaining shareholder(s) to purchase the shares of the departing shareholder in the event of certain triggering events, such as death, disability, retirement, or voluntary resignation. The agreement typically outlines the procedure for determining the purchase price, payment terms, and the allocation of shares among the remaining shareholders. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself agrees to redeem the shares of the departing shareholder. The agreement sets out the circumstances under which the redemption will occur, such as death, disability, or retirement, and outlines the method for valuing the shares and the terms of payment. 3. Hybrid Agreement: This agreement combines elements of both the cross-purchase and stock redemption agreements. It provides flexibility for either the remaining shareholders or the corporation to purchase the shares of the departing shareholder, depending on the triggering event. Key provisions typically included in an Alaska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy-Sell Provisions: 1. Purchase Price Determination: The agreement will specify how the purchase price for the shares will be determined, such as through a formula, appraisal, or an agreed-upon price. This prevents disputes and ensures a fair valuation of the shares. 2. Payment Terms: The agreement will outline the terms of payment, whether it be in a lump sum, installments, or through the use of a promissory note. The payment terms should be clear and reasonable to both parties. 3. Triggering Events: The agreement will identify the triggering events that would activate the buy-sell provisions, such as death, disability, retirement, or voluntary resignation. It aims to protect the interests of both shareholders in the event of unexpected circumstances. 4. Restrictions on Transfer: The agreement may include restrictions on the transfer of shares to third parties, ensuring that shares can only be transferred within the closely held corporation and to the remaining shareholders. 5. Dispute Resolution: The agreement may include provisions for dispute resolution mechanisms, such as mediation or arbitration, to resolve any disagreements or conflicts that may arise between the shareholders. 6. Non-Compete and Confidentiality: The agreement may contain clauses that restrict shareholders from engaging in activities that may compete with the corporation or disclose confidential information to outsiders. It is essential for shareholders of closely held corporations to have a well-drafted Shareholders' Agreement with buy-sell provisions in place. These agreements provide certainty, protection, and fairness for both parties involved in case of unforeseen events or the desire to part ways. Seeking legal counsel to draft or review such agreements is advisable to ensure compliance with Alaska state laws and to meet the specific needs and circumstances of the shareholders and the corporation.