A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights.
Utah Buy-Sell Agreement between Shareholders of Closely Held Corporation is a legal document that outlines the rules and regulations governing the transfer of shares between existing shareholders of a closely held corporation in the state of Utah. The purpose of a Buy-Sell Agreement is to provide a clear framework for the buying and selling of shares, ensuring a smooth transition and preventing conflicts among shareholders. This agreement can be customized to meet the specific needs and circumstances of the closely held corporation. There are several types of Buy-Sell Agreements that shareholders in a closely held corporation in Utah may consider: 1. Cross-Purchase Buy-Sell Agreement: In this type, individual shareholders agree to buy each other's shares in the event of an agreed-upon trigger event, such as the death, disability, retirement, or voluntary departure of a shareholder. 2. Redemption Buy-Sell Agreement: Here, the corporation itself agrees to buy the shares of a departing shareholder. This can be done by using corporate funds or through a loan arrangement. 3. Hybrid Buy-Sell Agreement: Combining elements of both the cross-purchase and redemption agreements, a hybrid agreement allows shareholders and the corporation to have the option to purchase shares, depending on the specific trigger event. Key provisions often included in a Utah Buy-Sell Agreement include: — Triggering Events: Clearly defining events that will trigger the buyout, such as death, disability, retirement, divorce, bankruptcy, or voluntary departure. — Purchase Price: Determining how the shares will be valued at the time of buyout and the payment terms, whether it be a lump sum, installment payments, or through corporate-held life insurance policies. — Right of First Refusal: Granting existing shareholders the first opportunity to purchase the shares being sold before they can be offered to external parties. — Non-Compete and Non-Solicitation Clauses: Prohibiting departing shareholders from competing with the corporation or soliciting employees or customers for a specific period of time. — Dispute Resolution: Outlining mechanisms to resolve any disputes arising from the agreement, such as mediation or arbitration. Utah Buy-Sell Agreements between Shareholders of Closely Held Corporations are crucial for protecting the interests and ensuring a smooth transition of ownership within closely held corporations in the state. It is advisable to consult with a qualified attorney with experience in corporate law to draft or review such agreements to ensure compliance with Utah state laws and the unique needs of the corporation and its shareholders.
