Sacramento California Shareholders' Agreement with Buy-Sell Agreement Allowing Corporation the First Right of Refusal to Purchase the Shares of Deceased Shareholder should the Beneficiaries of the Deceased Shareholder Desire to Sell such Shares

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• County: Sacramento
• Control #: US-02629BG
• 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 Sacramento California Shareholders' Agreement with a Buy-Sell Agreement is a legally binding document that outlines the rights and obligations of shareholders in a corporation, particularly in the event of the death of a shareholder. This agreement includes a clause that grants the corporation the first right of refusal to purchase the shares of a deceased shareholder if the beneficiaries of the deceased shareholder choose to sell those shares. The purpose of this agreement is to provide a mechanism for the orderly transfer of ownership and control of the corporation in case a shareholder passes away. It aims to protect the interests of both the surviving shareholders and the beneficiaries of the deceased shareholder's estate. Some key provisions included in this type of agreement are: 1. First Right of Refusal: This provision grants the corporation the first opportunity to purchase the shares of the deceased shareholder before they are offered to any third parties. The corporation typically has a specified period within which it must exercise this right. 2. Purchase Price Determination: The agreement will lay out the method for determining the purchase price of the shares, which can be based on a pre-determined formula or determined through negotiation or appraisal. 3. Funding Mechanism: To facilitate the purchase of the shares, the agreement may specify how the corporation will fund the transaction. This can include using the corporation's own cash reserves, arranging for financing, or establishing an insurance policy on the lives of the shareholders to provide the necessary funds. 4. Shareholder Obligations: The agreement may include provisions regarding the obligations and responsibilities of the shareholders in the event of a shareholder's death. This can include the obligation to sell shares to the corporation, restrictions on transferring shares to third parties, or requirements to update beneficiary designations. 5. Dispute Resolution: In case of any disputes arising from the agreement, a mechanism for resolving conflicts, such as mediation or arbitration, may be outlined. It is important to note that there can be variations of this type of agreement, depending on the specific needs and preferences of the shareholders and the corporation. Some alternate names for this type of agreement can include "Buy-Sell Agreement with First Right of Refusal in Sacramento California," "Sacramento California Agreement Allowing Corporation First Right of Refusal to Purchase Deceased Shareholder's Shares," or "Sacramento California Shareholders' Agreement with Buy-Sell Provision for Deceased Shareholder's Shares."

A Sacramento California Shareholders' Agreement with a Buy-Sell Agreement is a legally binding document that outlines the rights and obligations of shareholders in a corporation, particularly in the event of the death of a shareholder. This agreement includes a clause that grants the corporation the first right of refusal to purchase the shares of a deceased shareholder if the beneficiaries of the deceased shareholder choose to sell those shares. The purpose of this agreement is to provide a mechanism for the orderly transfer of ownership and control of the corporation in case a shareholder passes away. It aims to protect the interests of both the surviving shareholders and the beneficiaries of the deceased shareholder's estate. Some key provisions included in this type of agreement are: 1. First Right of Refusal: This provision grants the corporation the first opportunity to purchase the shares of the deceased shareholder before they are offered to any third parties. The corporation typically has a specified period within which it must exercise this right. 2. Purchase Price Determination: The agreement will lay out the method for determining the purchase price of the shares, which can be based on a pre-determined formula or determined through negotiation or appraisal. 3. Funding Mechanism: To facilitate the purchase of the shares, the agreement may specify how the corporation will fund the transaction. This can include using the corporation's own cash reserves, arranging for financing, or establishing an insurance policy on the lives of the shareholders to provide the necessary funds. 4. Shareholder Obligations: The agreement may include provisions regarding the obligations and responsibilities of the shareholders in the event of a shareholder's death. This can include the obligation to sell shares to the corporation, restrictions on transferring shares to third parties, or requirements to update beneficiary designations. 5. Dispute Resolution: In case of any disputes arising from the agreement, a mechanism for resolving conflicts, such as mediation or arbitration, may be outlined. It is important to note that there can be variations of this type of agreement, depending on the specific needs and preferences of the shareholders and the corporation. Some alternate names for this type of agreement can include "Buy-Sell Agreement with First Right of Refusal in Sacramento California," "Sacramento California Agreement Allowing Corporation First Right of Refusal to Purchase Deceased Shareholder's Shares," or "Sacramento California Shareholders' Agreement with Buy-Sell Provision for Deceased Shareholder's Shares."