Travis Texas Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• County: Travis
• 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. A Travis Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the buying and selling of shares within the corporation. This agreement is specifically designed for closely held corporations operating within the state of Texas and ensures a smooth transition of ownership in the event of certain triggering events. In this type of agreement, the two shareholders of the closely held corporation lay out the rules and procedures for the purchase and sale of shares between them, maintaining control over the ownership within the corporation. The agreement provides a structured process for buyouts, thereby avoiding potential conflicts and disputes. Key provisions in a Travis Texas Buy-Sell Agreement may include: 1. Triggering Events: The agreement typically identifies the triggering events that can initiate a buyout, such as death, disability, retirement, divorce, or voluntary exit. This ensures that the shares are transferred according to pre-determined conditions. 2. Valuation: To establish a fair price for the shares, the agreement may specify the valuation methods, such as appraisals or predetermined formulas. This prevents disputes over the price and allows for an efficient transfer process. 3. Rights of First Refusal: The agreement may grant the remaining shareholder(s) the right of first refusal to purchase the shares being sold, ensuring that existing shareholders have the opportunity to maintain control and prevent unwanted parties from becoming shareholders. 4. Payment Terms: The agreement should outline the payment terms for the buyout, such as cash payments, installment payments, or the use of company assets. Specific guidelines are established to finalize the transaction. 5. Non-Compete and Non-Disclosure Clauses: It is common to include non-compete and non-disclosure clauses to protect the corporation's trade secrets and prevent a departing shareholder from starting a competing business or sharing confidential information. There are various types of Travis Texas Buy-Sell Agreements between Two Shareholders of Closely Held Corporations, including: 1. Cross-Purchase Agreement: In this type, each shareholder agrees to purchase the shares of the other upon the occurrence of a triggering event. The remaining shareholder(s) directly buy the shares, maintaining their proportional ownership. 2. Stock Redemption Agreement: In this arrangement, the corporation itself agrees to redeem the shares of the departing shareholder with the remaining shareholder(s) receiving increased ownership in return. 3. Hybrid Agreement: This type combines elements of both cross-purchase and stock redemption agreements. It allows the shareholders to choose whether they want to purchase the shares individually or have the corporation redeem them based on the specific triggering event. In conclusion, a Travis Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a vital legal document that ensures an orderly transfer of ownership in the event of certain triggering events. By establishing clear rules, valuation methods, and payment terms, this agreement protects the interests of the shareholders and the overall stability of the closely held corporation.

A Travis Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for the buying and selling of shares within the corporation. This agreement is specifically designed for closely held corporations operating within the state of Texas and ensures a smooth transition of ownership in the event of certain triggering events. In this type of agreement, the two shareholders of the closely held corporation lay out the rules and procedures for the purchase and sale of shares between them, maintaining control over the ownership within the corporation. The agreement provides a structured process for buyouts, thereby avoiding potential conflicts and disputes. Key provisions in a Travis Texas Buy-Sell Agreement may include: 1. Triggering Events: The agreement typically identifies the triggering events that can initiate a buyout, such as death, disability, retirement, divorce, or voluntary exit. This ensures that the shares are transferred according to pre-determined conditions. 2. Valuation: To establish a fair price for the shares, the agreement may specify the valuation methods, such as appraisals or predetermined formulas. This prevents disputes over the price and allows for an efficient transfer process. 3. Rights of First Refusal: The agreement may grant the remaining shareholder(s) the right of first refusal to purchase the shares being sold, ensuring that existing shareholders have the opportunity to maintain control and prevent unwanted parties from becoming shareholders. 4. Payment Terms: The agreement should outline the payment terms for the buyout, such as cash payments, installment payments, or the use of company assets. Specific guidelines are established to finalize the transaction. 5. Non-Compete and Non-Disclosure Clauses: It is common to include non-compete and non-disclosure clauses to protect the corporation's trade secrets and prevent a departing shareholder from starting a competing business or sharing confidential information. There are various types of Travis Texas Buy-Sell Agreements between Two Shareholders of Closely Held Corporations, including: 1. Cross-Purchase Agreement: In this type, each shareholder agrees to purchase the shares of the other upon the occurrence of a triggering event. The remaining shareholder(s) directly buy the shares, maintaining their proportional ownership. 2. Stock Redemption Agreement: In this arrangement, the corporation itself agrees to redeem the shares of the departing shareholder with the remaining shareholder(s) receiving increased ownership in return. 3. Hybrid Agreement: This type combines elements of both cross-purchase and stock redemption agreements. It allows the shareholders to choose whether they want to purchase the shares individually or have the corporation redeem them based on the specific triggering event. In conclusion, a Travis Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a vital legal document that ensures an orderly transfer of ownership in the event of certain triggering events. By establishing clear rules, valuation methods, and payment terms, this agreement protects the interests of the shareholders and the overall stability of the closely held corporation.