Wake North Carolina Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• County: Wake
• 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 Wake North Carolina Shareholders' Agreement is a legal document that outlines the rights, obligations, and responsibilities of two shareholders who hold a majority stake in a closely-held corporation. This agreement includes specific provisions known as buy-sell provisions, which dictate how shares of the corporation may be bought or sold under various circumstances. There are different types of Wake North Carolina Shareholders' Agreements with Buy-Sell Provisions, including: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to purchase the shares of the other shareholder in the event of specified triggering events, such as death, disability, retirement, or withdrawal from the corporation. The purchase price is typically determined by a predetermined method or formula stated in the agreement. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself agrees to repurchase the shares of a shareholder upon the occurrence of triggering events. The purchase price can be determined similarly to the cross-purchase agreement. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and stock redemption agreements. In this scenario, some triggering events may lead to a cross-purchase between the shareholders, while others result in the corporation redeeming the shares. The Wake North Carolina Shareholders' Agreement with Buy-Sell Provisions typically covers various important aspects, including: 1. Purchase and Sale Terms: It outlines the terms and conditions under which shares may be bought or sold, including triggers for buy or sell events, such as death, disability, retirement, or withdrawal. 2. Valuation Method: The agreement specifies the method used to determine the value of the shares in question. This can include methods such as appraisals, book value, or a formula based on financial metrics. 3. Funding Mechanisms: The agreement may address how the purchase of shares will be funded. Common methods include life insurance policies, cash reserves, promissory notes, or third-party financing. 4. Right of First Refusal: This provision allows the remaining shareholder(s) to have the first opportunity to purchase the shares before they can be sold to a third party, ensuring continuity and control within the closely-held corporation. 5. Dispute Resolution: The agreement may provide a mechanism for resolving disputes related to the buy-sell provisions, such as using mediation, arbitration, or litigation. The Wake North Carolina Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a critically important document that offers protection, clarity, and guidance in the event of triggering events or the desire to transfer ownership within a closely-held corporation. It is advisable for shareholders to seek legal counsel when drafting, negotiating, and finalizing such an agreement to ensure it aligns with their specific needs and objectives.

A Wake North Carolina Shareholders' Agreement is a legal document that outlines the rights, obligations, and responsibilities of two shareholders who hold a majority stake in a closely-held corporation. This agreement includes specific provisions known as buy-sell provisions, which dictate how shares of the corporation may be bought or sold under various circumstances. There are different types of Wake North Carolina Shareholders' Agreements with Buy-Sell Provisions, including: 1. Cross-Purchase Agreement: This type of agreement allows each shareholder to purchase the shares of the other shareholder in the event of specified triggering events, such as death, disability, retirement, or withdrawal from the corporation. The purchase price is typically determined by a predetermined method or formula stated in the agreement. 2. Stock Redemption Agreement: In this type of agreement, the corporation itself agrees to repurchase the shares of a shareholder upon the occurrence of triggering events. The purchase price can be determined similarly to the cross-purchase agreement. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and stock redemption agreements. In this scenario, some triggering events may lead to a cross-purchase between the shareholders, while others result in the corporation redeeming the shares. The Wake North Carolina Shareholders' Agreement with Buy-Sell Provisions typically covers various important aspects, including: 1. Purchase and Sale Terms: It outlines the terms and conditions under which shares may be bought or sold, including triggers for buy or sell events, such as death, disability, retirement, or withdrawal. 2. Valuation Method: The agreement specifies the method used to determine the value of the shares in question. This can include methods such as appraisals, book value, or a formula based on financial metrics. 3. Funding Mechanisms: The agreement may address how the purchase of shares will be funded. Common methods include life insurance policies, cash reserves, promissory notes, or third-party financing. 4. Right of First Refusal: This provision allows the remaining shareholder(s) to have the first opportunity to purchase the shares before they can be sold to a third party, ensuring continuity and control within the closely-held corporation. 5. Dispute Resolution: The agreement may provide a mechanism for resolving disputes related to the buy-sell provisions, such as using mediation, arbitration, or litigation. The Wake North Carolina Shareholders' Agreement between Two Shareholders of a Closely Held Corporation with Buy-Sell Provisions is a critically important document that offers protection, clarity, and guidance in the event of triggering events or the desire to transfer ownership within a closely-held corporation. It is advisable for shareholders to seek legal counsel when drafting, negotiating, and finalizing such an agreement to ensure it aligns with their specific needs and objectives.