Phoenix Arizona Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• City: Phoenix
• 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. A Phoenix Arizona Shareholders' Agreement is a legally binding document that outlines the rights and obligations of two shareholders in a closely held corporation that includes buy-sell provisions. This agreement serves as a vital tool for managing the relationship between shareholders and providing mechanisms for resolving disputes and ensuring a smooth functioning of the corporation. In a Shareholders' Agreement between two shareholders in a closely held corporation in Phoenix, Arizona, with buy-sell provisions, several key elements are typically addressed. These include: 1. Ownership and Management Rights: The agreement specifies the respective ownership percentages of the shareholders and outlines the decision-making authority, voting rights, and board representation for each party. It may also mention any specific roles and responsibilities assigned to each shareholder within the corporation. 2. Buy-Sell Provisions: The agreement incorporates buy-sell provisions to establish mechanisms for the sale and transfer of shares. This can include rights of first refusal, tag-along rights, drag-along rights, or put and call options. These provisions ensure that shareholders have mechanisms in place to address potential situations such as the death, disability, retirement, or desire to sell shares of either party. 3. Valuation of Shares: The agreement may outline the methods to be used for valuing shares in the event of a buyout or sale. Common approaches include appraisals by independent experts or pre-determined formulas based on financial multiples or a predetermined price. 4. Dissolution or Exit Strategies: The agreement may include provisions for the dissolution of the corporation or exit strategies, such as mandatory buyouts triggered by specific events or timelines. These provisions can help avoid conflicts and provide a clear process for transitioning out of the corporation. Different types of Phoenix Arizona Shareholders' Agreements between two shareholders of a closely-held corporation with buy-sell provisions can be categorized based on specific variations in the terms and conditions mentioned above. For example: 1. Basic Shareholders' Agreement with Buy-Sell Provisions: This type of agreement covers essential elements necessary for managing the relationship between two shareholders and facilitating share transfers in the corporation. 2. Shareholders' Agreement with Rights of First Refusal and Tag-Along/Drag-Along Rights: This agreement includes provisions giving shareholders the right to first refusal to purchase shares if the other shareholder intends to sell. It also allows dissenting shareholders to join in the sale of their shares to potential buyers. 3. Shareholders' Agreement with Put and Call Options: In this agreement, shareholders have the right to "put" their shares, meaning they have the option to compel the other shareholder to buy their shares at a predetermined price. Conversely, the other shareholder has the option to "call" the shares, obligating the first shareholder to sell at the same predetermined price. It is important to consult with legal professionals to ensure the Shareholders' Agreement is tailored to the specific needs and circumstances of the closely-held corporation and its shareholders in Phoenix, Arizona.

A Phoenix Arizona Shareholders' Agreement is a legally binding document that outlines the rights and obligations of two shareholders in a closely held corporation that includes buy-sell provisions. This agreement serves as a vital tool for managing the relationship between shareholders and providing mechanisms for resolving disputes and ensuring a smooth functioning of the corporation. In a Shareholders' Agreement between two shareholders in a closely held corporation in Phoenix, Arizona, with buy-sell provisions, several key elements are typically addressed. These include: 1. Ownership and Management Rights: The agreement specifies the respective ownership percentages of the shareholders and outlines the decision-making authority, voting rights, and board representation for each party. It may also mention any specific roles and responsibilities assigned to each shareholder within the corporation. 2. Buy-Sell Provisions: The agreement incorporates buy-sell provisions to establish mechanisms for the sale and transfer of shares. This can include rights of first refusal, tag-along rights, drag-along rights, or put and call options. These provisions ensure that shareholders have mechanisms in place to address potential situations such as the death, disability, retirement, or desire to sell shares of either party. 3. Valuation of Shares: The agreement may outline the methods to be used for valuing shares in the event of a buyout or sale. Common approaches include appraisals by independent experts or pre-determined formulas based on financial multiples or a predetermined price. 4. Dissolution or Exit Strategies: The agreement may include provisions for the dissolution of the corporation or exit strategies, such as mandatory buyouts triggered by specific events or timelines. These provisions can help avoid conflicts and provide a clear process for transitioning out of the corporation. Different types of Phoenix Arizona Shareholders' Agreements between two shareholders of a closely-held corporation with buy-sell provisions can be categorized based on specific variations in the terms and conditions mentioned above. For example: 1. Basic Shareholders' Agreement with Buy-Sell Provisions: This type of agreement covers essential elements necessary for managing the relationship between two shareholders and facilitating share transfers in the corporation. 2. Shareholders' Agreement with Rights of First Refusal and Tag-Along/Drag-Along Rights: This agreement includes provisions giving shareholders the right to first refusal to purchase shares if the other shareholder intends to sell. It also allows dissenting shareholders to join in the sale of their shares to potential buyers. 3. Shareholders' Agreement with Put and Call Options: In this agreement, shareholders have the right to "put" their shares, meaning they have the option to compel the other shareholder to buy their shares at a predetermined price. Conversely, the other shareholder has the option to "call" the shares, obligating the first shareholder to sell at the same predetermined price. It is important to consult with legal professionals to ensure the Shareholders' Agreement is tailored to the specific needs and circumstances of the closely-held corporation and its shareholders in Phoenix, Arizona.