Oregon Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• Control #: US-02553BG
• 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. Description: Oregon Buy-Sell Agreement between Two Shareholders of Closely Held Corporation In the state of Oregon, when two shareholders are closely held corporation owners, a Buy-Sell Agreement becomes crucial to outline the terms and conditions of selling or transferring shares. This legal document ensures a smooth transition and protects the interests of both parties involved in the event of a shareholder's departure or the need to change ownership. Key components of an Oregon Buy-Sell Agreement include: 1. Shareholder Obligations: This section outlines the responsibilities and obligations of each shareholder regarding the sale or transfer of shares. It covers aspects such as the right of first refusal, non-competition agreements, and confidentiality clauses. 2. Purchase Price Determination: The agreement defines mechanisms to determine the purchase price of shares. Common approaches include fixed pricing, fair market value, book value, or a combination of these. The specific method chosen should be clearly stated in the agreement. 3. Triggering Events: The agreement identifies events that can trigger the buy-sell provision, such as the death, disability, retirement, or voluntary resignation of a shareholder. It may also include triggers in case of a force majeure event or violation of certain company policies. 4. Restrictions on Transfer: This section outlines the limitations on transferring shares outside the agreement. It may impose restrictions on selling to certain individuals or entities, ensuring that the control and ownership remain within a limited group of shareholders. 5. Funding Methods: Buy-Sell Agreements typically incorporate funding mechanisms to facilitate the purchase of shares. This can be through cash payment, installment plans, promissory notes, or leveraging life insurance policies. 6. Dispute Resolution: The agreement should include a dispute resolution mechanism, such as mediation or arbitration processes, to settle any conflicts arising from the valuation or execution of the buy-sell provisions. This ensures a fair and impartial resolution of disputes. Types of Oregon Buy-Sell Agreements: 1. Cross-Purchase Agreement: In a cross-purchase agreement, each shareholder agrees to buy the shares of the departing shareholder. This type of agreement is commonly used in smaller corporations with a limited number of shareholders. 2. Stock Redemption Agreement: In a stock redemption agreement, the corporation itself agrees to purchase the shares of the departing shareholder. This approach is often seen in larger corporations or when there are substantial differences in ownership percentages. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and stock redemption agreements. It allows shareholders to choose whether to buy shares individually or have the corporation repurchase them, offering flexibility based on the specific circumstances of the corporation. The nature and complexity of an Oregon Buy-Sell Agreement may vary based on the unique characteristics of the corporation and the shareholders involved. It is essential to consult with legal professionals experienced in Oregon corporate law to draft a comprehensive and tailored agreement that addresses the specific needs of the closely held corporation.

Description: Oregon Buy-Sell Agreement between Two Shareholders of Closely Held Corporation In the state of Oregon, when two shareholders are closely held corporation owners, a Buy-Sell Agreement becomes crucial to outline the terms and conditions of selling or transferring shares. This legal document ensures a smooth transition and protects the interests of both parties involved in the event of a shareholder's departure or the need to change ownership. Key components of an Oregon Buy-Sell Agreement include: 1. Shareholder Obligations: This section outlines the responsibilities and obligations of each shareholder regarding the sale or transfer of shares. It covers aspects such as the right of first refusal, non-competition agreements, and confidentiality clauses. 2. Purchase Price Determination: The agreement defines mechanisms to determine the purchase price of shares. Common approaches include fixed pricing, fair market value, book value, or a combination of these. The specific method chosen should be clearly stated in the agreement. 3. Triggering Events: The agreement identifies events that can trigger the buy-sell provision, such as the death, disability, retirement, or voluntary resignation of a shareholder. It may also include triggers in case of a force majeure event or violation of certain company policies. 4. Restrictions on Transfer: This section outlines the limitations on transferring shares outside the agreement. It may impose restrictions on selling to certain individuals or entities, ensuring that the control and ownership remain within a limited group of shareholders. 5. Funding Methods: Buy-Sell Agreements typically incorporate funding mechanisms to facilitate the purchase of shares. This can be through cash payment, installment plans, promissory notes, or leveraging life insurance policies. 6. Dispute Resolution: The agreement should include a dispute resolution mechanism, such as mediation or arbitration processes, to settle any conflicts arising from the valuation or execution of the buy-sell provisions. This ensures a fair and impartial resolution of disputes. Types of Oregon Buy-Sell Agreements: 1. Cross-Purchase Agreement: In a cross-purchase agreement, each shareholder agrees to buy the shares of the departing shareholder. This type of agreement is commonly used in smaller corporations with a limited number of shareholders. 2. Stock Redemption Agreement: In a stock redemption agreement, the corporation itself agrees to purchase the shares of the departing shareholder. This approach is often seen in larger corporations or when there are substantial differences in ownership percentages. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and stock redemption agreements. It allows shareholders to choose whether to buy shares individually or have the corporation repurchase them, offering flexibility based on the specific circumstances of the corporation. The nature and complexity of an Oregon Buy-Sell Agreement may vary based on the unique characteristics of the corporation and the shareholders involved. It is essential to consult with legal professionals experienced in Oregon corporate law to draft a comprehensive and tailored agreement that addresses the specific needs of the closely held corporation.