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This is an agreement between a company and its shareholders that restricts the transfer of shares in order to maintain continuity of corporate ownership. This agreement provides that if a shareholder desires to sell their shares in the company, they must first offer the shares to the corporation for purchase. In addition, this agreement covers what happens to the transferability of the shares upon the death of a shareholder. Ideal for small businesses, this agreement should be used by entities that want to restrict the transfer of shares.
This is an agreement between a company and its shareholders that restricts the transfer of shares in order to maintain continuity of corporate ownership. This agreement provides that if a shareholder desires to sell their shares in the company, they must first offer the shares to the corporation for purchase. In addition, this agreement covers what happens to the transferability of the shares upon the death of a shareholder. Ideal for small businesses, this agreement should be used by entities that want to restrict the transfer of shares. SHAREHOLDER'S / STOCKHOLDER’S AGREEMENT OF [ENTER COMPANY NAME] THIS SHAREHOLDER'S AGREEMENT (this “Agreement”), is made and entered into as of this _____ day of ________, ______, by and between [Enter Company Name] (the “Company”),a [Enter State] corporation herein referred to as the corporation, and the following stockholders of the corporation, here referred to as the stockholders: Name Stockholder’s Residence Number of Shares SELECT only one of the following: ______ For purposes of this Agreement, the Shareholder is an employee Shareholder (an “Employee Shareholder”) and is bound to all the provisions of this Agreement. Shareholder's Initials: ______ ______ For purposes of this Agreement, the Shareholder is not an Employee Shareholder and is not bound to the provisions of this Agreement. Shareholder's Initials: ________ WHEREAS, the parties hereto deem it in their best interest to provide for ultimate ownership and desire to assure continuity of ownership of the corporation and of the shares of the Company (the “Stock”), or rights thereto; The stockholders, after mutual consultations, have agreed, in order to ensure such continuity, to restrict the sale or transfer of shares of the corporation, both during the lifetime and at the death of any of the stockholders. For the reasons above set forth, and in consideration of the mutual covenants and promises of the parties hereto, the corporation and the stockholders agree as follows: FIRST RIGHT OF PURCHASE If any stockholder shall, during the stockholder’s lifetime, desire to sell or transfer all or any part of the stockholder’s shares of stock in the corporation, the stockholder shall first offer to sell the above-mentioned shares to the corporation at a price per share equal to the then book value of each of the shares. An independent certified accountant shall determine book value. The Shareholder shall not dispose of any of his or her Stock except as permitted by this Agreement, and any such attempted disposition shall be void and shall not be recognized or registered upon the books of the Company. © Copyright 2013 Docstoc Inc. registered document proprietary, copy not 2 The Shareholder, or his or her personal representative, shall notify the Company immediately upon the occurrence of an involuntary disposal of his or her Stock. The Company shall notify the other shareholders of any such involuntary transfer. In the event the Company purchases any Stock pursuant to this Agreement, the Company shall set off against the purchase price for the Stock any indebtedness owed to the Company by such Shareholder or his or her estate, whether or not such indebtedness is then due. If any shareholder or other third party purchases any Stock pursuant to this Agreement, as a condition of the purchase, the purchaser agrees, prior to making any payment to the transferring Shareholder, that the purchaser shall pay to the Company that part of the purchase price equal to any indebtedness owed by the seller or his or her estate to the Company, whether or not such indebtedness is then due, and such payments shall be deemed payments on account of said purchase price or the promissory note issued by such shareholder with respect thereto. OFFER TO OTHER STOCKHOLDERS IF CORPORATION DOES NOT PURCHASE The offer to sell must be communicated by the selling stockholder to the board of directors of the corporation and to all other stockholders. If the corporation shall refuse or neglect to notify the selling stockholder of its intention to purchase the shares or if the corporation is prohibited by law from making such a purchase or redemption, the selling stockholder shall then notify the other stockholders of the stockholder’s intention to sell and the number of shares offered for sale. Each of the other stockholders having the right to purchase the number of shares owned by the selling stockholder equal to such purchasing stockholders’ proportionate ownership of the corporation immediately prior to the receipt of such offer to sell. STOCKHOLDER’S RIGHTS IF NEITHER CORPORATION NOR OTHER STOCKHOLDERS EXERCISE OPTION Should the corporation nor the other stockholders elect to purchase the shares the stockholder desiring to sell or transfer his or her shares shall be free to do so to any other person or corporation free of any restrictions provided herein; provided, however, that such sale or transfer shall not be on terms less favorable to the selling stockholder unless the less favorable terms are re-offered to the corporation and/or the other stockholders as herein provided in above section.
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