A Delaware Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation is a legally binding contract between the shareholders of a close corporation in the state of Delaware that specifies the distribution of dividends based on specific allocations agreed upon by the shareholders. This agreement helps establish clear guidelines for the allocation and distribution of profits among the shareholders, ensuring fairness and transparency within the corporation. The main purpose of a Delaware Shareholders' Agreement with Special Allocation of Dividends is to determine how dividends will be distributed among the shareholders based on certain criteria. These criteria can include factors such as the percentage of ownership held by each shareholder, the capital contributions made by each shareholder, or any other specific agreements reached by the shareholders. By having this agreement in place, shareholders can avoid conflicts and disputes that may arise when it comes to the distribution of profits. It provides a clear understanding of each shareholder's rights and obligations in relation to dividends, allowing for a smoother and more efficient operation of the close corporation. There are different types of Delaware Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation, depending on the specific criteria used for the allocation. Some common types include: 1. Ownership Percentage Allocation: This type of agreement allocates dividends based on the ownership percentage held by each shareholder. For example, if one shareholder owns 60% of the corporation's shares, they would receive 60% of the distributed dividends. 2. Capital Contribution Allocation: In this type of agreement, dividends are allocated based on the capital contributions made by each shareholder. Shareholders who have made larger capital investments would receive a larger proportion of the dividends. 3. Performance-based Allocation: This agreement allocates dividends based on the performance of each shareholder or the performance of their specific business units within the close corporation. Shareholders who have achieved better financial results or contributed more to the corporation's growth may receive a higher allocation of dividends. 4. Hybrid Allocation: This type of agreement combines multiple criteria for dividend allocation, considering factors such as ownership percentage, capital contributions, and performance. The shareholders agree upon specific weightings for each criterion to determine the final dividend allocation. Overall, a Delaware Shareholders' Agreement with Special Allocation of Dividends among Shareholders in a Close Corporation provides a comprehensive framework for the fair and efficient distribution of dividends within a close corporation. It offers protection and clarity to the shareholders, promoting harmonious relationships and the overall success of the corporation.