Maine 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. Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions: A Maine Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy Sell Provisions is a legal document that outlines the rights, obligations, and responsibilities of shareholders in a closely held corporation based in the state of Maine. This agreement serves as a contract between the shareholders and provides a framework for their relationship, addressing various key aspects of their role in the business. One type of Maine Shareholders' Agreement with Buy Sell Provisions is the Cross Purchase Agreement. In this agreement, each shareholder agrees to buy the other shareholder's shares in the event of a triggering event such as death, disability, retirement, or voluntary exit from the business. The buyout price is usually predetermined in the agreement or determined through an agreed-upon valuation method. Another type is the Stock Redemption Agreement, where the corporation itself is obligated to purchase the shares from the exiting shareholder upon the occurrence of a triggering event. The redemption price may also be predetermined or determined based on an agreed-upon valuation method. Key provisions typically included in a Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions are: 1. Triggering Events: This section identifies the events that may trigger a buyout, such as death, disability, retirement, divorce, bankruptcy, or voluntary exit. 2. Purchase Price: The agreement specifies how the purchase price of shares will be determined, whether through a predetermined formula, an independent appraisal, or negotiated between the parties. 3. Funding Mechanism: This provision outlines how the purchasing shareholder or the corporation will fund the buyout, which can involve utilizing insurance policies, internal financing, or external borrowing. 4. Terms and Conditions of Sale: This section describes the terms and conditions under which the shares will be sold, including payment terms, any non-compete obligations, and confidentiality agreements. 5. Dispute Resolution: The agreement typically includes a provision for resolving any disputes that may arise between the shareholders, such as mediation or arbitration, to avoid costly litigation. 6. Voting and Management Rights: This provision outlines the voting and management rights of the shareholders, whether they are equal or based on a percentage of ownership. 7. Non-Disclosure and Non-Compete: To protect the corporation's sensitive information, shareholders may be required to sign a non-disclosure agreement and agree to non-compete restrictions, ensuring that they will not engage in similar business activities that may compete with the corporation. 8. Termination: The agreement may include provisions for termination, outlining the circumstances under which the agreement can be terminated and the procedures to be followed. A Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is essential for protecting the interests and investments of shareholders in a closely held corporation. It provides a clear roadmap for the buyout of shares in case of significant events, ensuring a smooth transition and preserving the stability of the business. Seeking legal advice when drafting such an agreement is highly recommended ensuring compliance with Maine state laws and to address specific requirements of the shareholders and the corporation.

Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions: A Maine Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy Sell Provisions is a legal document that outlines the rights, obligations, and responsibilities of shareholders in a closely held corporation based in the state of Maine. This agreement serves as a contract between the shareholders and provides a framework for their relationship, addressing various key aspects of their role in the business. One type of Maine Shareholders' Agreement with Buy Sell Provisions is the Cross Purchase Agreement. In this agreement, each shareholder agrees to buy the other shareholder's shares in the event of a triggering event such as death, disability, retirement, or voluntary exit from the business. The buyout price is usually predetermined in the agreement or determined through an agreed-upon valuation method. Another type is the Stock Redemption Agreement, where the corporation itself is obligated to purchase the shares from the exiting shareholder upon the occurrence of a triggering event. The redemption price may also be predetermined or determined based on an agreed-upon valuation method. Key provisions typically included in a Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions are: 1. Triggering Events: This section identifies the events that may trigger a buyout, such as death, disability, retirement, divorce, bankruptcy, or voluntary exit. 2. Purchase Price: The agreement specifies how the purchase price of shares will be determined, whether through a predetermined formula, an independent appraisal, or negotiated between the parties. 3. Funding Mechanism: This provision outlines how the purchasing shareholder or the corporation will fund the buyout, which can involve utilizing insurance policies, internal financing, or external borrowing. 4. Terms and Conditions of Sale: This section describes the terms and conditions under which the shares will be sold, including payment terms, any non-compete obligations, and confidentiality agreements. 5. Dispute Resolution: The agreement typically includes a provision for resolving any disputes that may arise between the shareholders, such as mediation or arbitration, to avoid costly litigation. 6. Voting and Management Rights: This provision outlines the voting and management rights of the shareholders, whether they are equal or based on a percentage of ownership. 7. Non-Disclosure and Non-Compete: To protect the corporation's sensitive information, shareholders may be required to sign a non-disclosure agreement and agree to non-compete restrictions, ensuring that they will not engage in similar business activities that may compete with the corporation. 8. Termination: The agreement may include provisions for termination, outlining the circumstances under which the agreement can be terminated and the procedures to be followed. A Maine Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions is essential for protecting the interests and investments of shareholders in a closely held corporation. It provides a clear roadmap for the buyout of shares in case of significant events, ensuring a smooth transition and preserving the stability of the business. Seeking legal advice when drafting such an agreement is highly recommended ensuring compliance with Maine state laws and to address specific requirements of the shareholders and the corporation.