Harris Texas Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• County: Harris
• 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. The Harris Texas Shareholders' Agreement is a legal document that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation. This agreement contains buy-sell provisions, which are clauses that determine the terms and conditions for the sale or transfer of shares between the shareholders. In Harris Texas, there are several types of Shareholders' Agreements between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions. Some common variations include: 1. Cross-Purchase Agreement: This type of agreement allows one shareholder to buy the shares of the other shareholder in the event of certain triggering events, such as death, disability, retirement, or voluntary departure. The remaining shareholder(s) purchases the shares at an agreed-upon price or according to a predetermined valuation formula. 2. Redemption Agreement: In a redemption agreement, the corporation itself is obligated to buy the shares from the departing shareholder. The corporation funds the purchase using existing assets, retained earnings, or through obtaining financing. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and redemption agreements. Here, the remaining shareholder(s) and the corporation have the option to purchase the shares of the departing shareholder, depending on the triggering event. The Harris Texas Shareholders' Agreement typically includes provisions related to the following aspects: 1. Purchase Price: The agreement defines how the purchase price for the shares will be determined, whether through a fixed price, formula, or appraisal process. 2. Funding: It outlines the method by which the purchasing shareholder(s) will finance the purchase, such as through personal funds, insurance policies, or corporate loans. 3. Triggering Events: The agreement specifies the events that can initiate a buy-sell provision, which may include death, disability, retirement, divorce, bankruptcy, or a voluntary decision to sell. 4. Rights and Restrictions: It establishes any restrictions on the sale, transfer, or encumbrance of shares, protecting the interests of both shareholders. 5. Dispute Resolution: The agreement may incorporate provisions for resolving potential disputes, such as through mediation, arbitration, or litigation. 6. Valuation: It outlines the method for valuing the shares, ensuring a fair and objective process for determining their worth. The Harris Texas Shareholders' Agreement aims to protect the interests of both shareholders in a closely held corporation and provide a clear framework for the sale or transfer of shares in various scenarios.

The Harris Texas Shareholders' Agreement is a legal document that outlines the rights, responsibilities, and obligations of two shareholders in a closely held corporation. This agreement contains buy-sell provisions, which are clauses that determine the terms and conditions for the sale or transfer of shares between the shareholders. In Harris Texas, there are several types of Shareholders' Agreements between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions. Some common variations include: 1. Cross-Purchase Agreement: This type of agreement allows one shareholder to buy the shares of the other shareholder in the event of certain triggering events, such as death, disability, retirement, or voluntary departure. The remaining shareholder(s) purchases the shares at an agreed-upon price or according to a predetermined valuation formula. 2. Redemption Agreement: In a redemption agreement, the corporation itself is obligated to buy the shares from the departing shareholder. The corporation funds the purchase using existing assets, retained earnings, or through obtaining financing. 3. Hybrid Agreement: A hybrid agreement combines elements of both cross-purchase and redemption agreements. Here, the remaining shareholder(s) and the corporation have the option to purchase the shares of the departing shareholder, depending on the triggering event. The Harris Texas Shareholders' Agreement typically includes provisions related to the following aspects: 1. Purchase Price: The agreement defines how the purchase price for the shares will be determined, whether through a fixed price, formula, or appraisal process. 2. Funding: It outlines the method by which the purchasing shareholder(s) will finance the purchase, such as through personal funds, insurance policies, or corporate loans. 3. Triggering Events: The agreement specifies the events that can initiate a buy-sell provision, which may include death, disability, retirement, divorce, bankruptcy, or a voluntary decision to sell. 4. Rights and Restrictions: It establishes any restrictions on the sale, transfer, or encumbrance of shares, protecting the interests of both shareholders. 5. Dispute Resolution: The agreement may incorporate provisions for resolving potential disputes, such as through mediation, arbitration, or litigation. 6. Valuation: It outlines the method for valuing the shares, ensuring a fair and objective process for determining their worth. The Harris Texas Shareholders' Agreement aims to protect the interests of both shareholders in a closely held corporation and provide a clear framework for the sale or transfer of shares in various scenarios.