Hennepin Minnesota Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• County: Hennepin
• 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. Hennepin Minnesota Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a legal document that outlines the terms and conditions for the buying and selling of shares between two shareholders in a closely held corporation located in Hennepin County, Minnesota. The purpose of this agreement is to establish a framework for the smooth transfer of ownership in the event of certain triggering events, such as death, disability, retirement, or voluntary sale of shares. It ensures that the remaining shareholder(s) have the opportunity to purchase the shares of the departing shareholder at a predetermined price and prevents unwanted third-party ownership. There are different types of Hennepin Minnesota Buy-Sell Agreements, tailored to specific scenarios and requirements. Some common types include: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholder(s) agree to purchase the departing shareholder's shares. Each shareholder has the option to buy a proportionate number of shares, based on their ownership percentage. 2. Stock Redemption Agreement: Here, the corporation itself buys back the shares of the departing shareholder. The corporation may use its funds or take up a loan to finance the purchase. 3. Hybrid Agreement: This agreement combines elements of both the cross-purchase and stock redemption agreements. The remaining shareholders have the primary option to purchase the shares, but if they decline, the corporation may step in to buy the shares. Key provisions typically found in a Hennepin Minnesota Buy-Sell Agreement include: — Valuation method: The agreement should specify how the shares will be valued in case of a triggering event. Common methods include appraisal by a qualified professional or predetermined formula. — Purchase price and terms: The agreement should outline the terms of payment, such as lump sum or installment payments, and any applicable interest rates. — Funding mechanisms: If the agreement requires financing, it should specify the funding sources, such as personal funds, corporate funds, or insurance policies. — Right of first refusal: The agreement may grant the remaining shareholders the right of first refusal, allowing them the opportunity to purchase shares before they are offered to third parties. — Dispute resolution: A mechanism for resolving disputes arising from the implementation of the agreement, such as mediation or arbitration, should be included. It is important for shareholders to work closely with legal professionals experienced in corporate law to draft a customized Hennepin Minnesota Buy-Sell Agreement that adequately addresses their specific needs and circumstances. By having a well-documented agreement in place, shareholders can ensure a seamless transition of ownership and protect the interests of both parties involved.

Hennepin Minnesota Buy-Sell Agreement between Two Shareholders of Closely Held Corporation is a legal document that outlines the terms and conditions for the buying and selling of shares between two shareholders in a closely held corporation located in Hennepin County, Minnesota. The purpose of this agreement is to establish a framework for the smooth transfer of ownership in the event of certain triggering events, such as death, disability, retirement, or voluntary sale of shares. It ensures that the remaining shareholder(s) have the opportunity to purchase the shares of the departing shareholder at a predetermined price and prevents unwanted third-party ownership. There are different types of Hennepin Minnesota Buy-Sell Agreements, tailored to specific scenarios and requirements. Some common types include: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholder(s) agree to purchase the departing shareholder's shares. Each shareholder has the option to buy a proportionate number of shares, based on their ownership percentage. 2. Stock Redemption Agreement: Here, the corporation itself buys back the shares of the departing shareholder. The corporation may use its funds or take up a loan to finance the purchase. 3. Hybrid Agreement: This agreement combines elements of both the cross-purchase and stock redemption agreements. The remaining shareholders have the primary option to purchase the shares, but if they decline, the corporation may step in to buy the shares. Key provisions typically found in a Hennepin Minnesota Buy-Sell Agreement include: — Valuation method: The agreement should specify how the shares will be valued in case of a triggering event. Common methods include appraisal by a qualified professional or predetermined formula. — Purchase price and terms: The agreement should outline the terms of payment, such as lump sum or installment payments, and any applicable interest rates. — Funding mechanisms: If the agreement requires financing, it should specify the funding sources, such as personal funds, corporate funds, or insurance policies. — Right of first refusal: The agreement may grant the remaining shareholders the right of first refusal, allowing them the opportunity to purchase shares before they are offered to third parties. — Dispute resolution: A mechanism for resolving disputes arising from the implementation of the agreement, such as mediation or arbitration, should be included. It is important for shareholders to work closely with legal professionals experienced in corporate law to draft a customized Hennepin Minnesota Buy-Sell Agreement that adequately addresses their specific needs and circumstances. By having a well-documented agreement in place, shareholders can ensure a seamless transition of ownership and protect the interests of both parties involved.