San Jose 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
• City: San Jose
• 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 San Jose 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 is a legally binding contract between the shareholders of a corporation in San Jose, California. This agreement includes a buy-sell provision that grants the corporation the first opportunity to purchase the shares of a deceased shareholder, in case the beneficiaries of the deceased shareholder wish to sell those shares. The purpose of this agreement is to ensure stability and continuity within the corporation following the death of a shareholder. It provides a mechanism for the surviving shareholders or the corporation itself to maintain control over the ownership of the shares, preventing an undesired or unknown party from becoming a shareholder. This type of agreement can be tailored to suit the specific needs and preferences of the shareholders and corporation. Different variations may exist, including: 1. Cross-Purchase Agreement: In this arrangement, the surviving shareholders individually have the right to purchase the shares of the deceased shareholder. 2. Redemption Agreement: Here, the corporation itself has the option to buy the shares of the deceased shareholder. 3. Hybrid Agreement: This variant combines elements of both cross-purchase and redemption agreements, providing flexibility to the shareholders and the corporation. The agreement typically includes various key provisions, such as: a. First Right of Refusal: Provisions that grant the corporation the first opportunity to purchase the shares before any third party. b. Purchase Price Determination: Mechanisms to determine the price at which the shares will be purchased. This can be based on fair market value, predetermined formulas, or appraisals. c. Payment Terms: Outlines the terms of payment for the purchase of the shares, such as lump-sum payments, installment payments, or through financing. d. Consent of Beneficiaries: Ensures that the beneficiaries of the deceased shareholder are willing to sell the shares, often requiring their written consent. e. Prohibition on Transfer: Specifies restrictions on transferring shares without offering them to the corporation or other shareholders first. f. Dispute Resolution: Outlines procedures for resolving any disputes arising from the agreement, such as arbitration or mediation. A San Jose 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 provides the corporation and its shareholders with legal protection, control over the ownership structure, and a smooth transition in the event of the death of a shareholder. It is a crucial document for corporations aiming to safeguard their interests and ensure their long-term viability.

A San Jose 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 is a legally binding contract between the shareholders of a corporation in San Jose, California. This agreement includes a buy-sell provision that grants the corporation the first opportunity to purchase the shares of a deceased shareholder, in case the beneficiaries of the deceased shareholder wish to sell those shares. The purpose of this agreement is to ensure stability and continuity within the corporation following the death of a shareholder. It provides a mechanism for the surviving shareholders or the corporation itself to maintain control over the ownership of the shares, preventing an undesired or unknown party from becoming a shareholder. This type of agreement can be tailored to suit the specific needs and preferences of the shareholders and corporation. Different variations may exist, including: 1. Cross-Purchase Agreement: In this arrangement, the surviving shareholders individually have the right to purchase the shares of the deceased shareholder. 2. Redemption Agreement: Here, the corporation itself has the option to buy the shares of the deceased shareholder. 3. Hybrid Agreement: This variant combines elements of both cross-purchase and redemption agreements, providing flexibility to the shareholders and the corporation. The agreement typically includes various key provisions, such as: a. First Right of Refusal: Provisions that grant the corporation the first opportunity to purchase the shares before any third party. b. Purchase Price Determination: Mechanisms to determine the price at which the shares will be purchased. This can be based on fair market value, predetermined formulas, or appraisals. c. Payment Terms: Outlines the terms of payment for the purchase of the shares, such as lump-sum payments, installment payments, or through financing. d. Consent of Beneficiaries: Ensures that the beneficiaries of the deceased shareholder are willing to sell the shares, often requiring their written consent. e. Prohibition on Transfer: Specifies restrictions on transferring shares without offering them to the corporation or other shareholders first. f. Dispute Resolution: Outlines procedures for resolving any disputes arising from the agreement, such as arbitration or mediation. A San Jose 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 provides the corporation and its shareholders with legal protection, control over the ownership structure, and a smooth transition in the event of the death of a shareholder. It is a crucial document for corporations aiming to safeguard their interests and ensure their long-term viability.