Shareholder Agreement Outlines rights and responsibilities of shareholders in a corporation.
1.1. Capitalized Terms. Unless otherwise defined herein, all capitalized terms used herein shall have the meanings ascribed to them in writing.
2.1. Shareholder Rights. Each Shareholder shall have the right and authority to vote their Shares, in person or by proxy, on all matters requiring a vote of the Shareholders of the Company, subject to the provisions of this Agreement and applicable law.
2.2. Shareholder Approval. The approval of the Shareholders holding at least a majority of the outstanding Shares shall be required for any of the following actions: (a) any amendment, modification, or repeal of any provision of the Company's articles of incorporation or bylaws; (b) any increase or decrease in the authorized capital stock of the Company; (c) the issuance of any additional Shares; (d) any merger, consolidation, sale, or other disposition of all or substantially all of the assets of the Company; (e) any liquidation, dissolution, or winding up of the affairs of the Company; and (f) any other actions requiring Shareholder approval under applicable law.
2.3. Representations. Each Shareholder represents and warrants to the Company and each other Shareholder that: (a) such Shareholder has the legal capacity and authority to enter into this Agreement; (b) such Shareholder is the record and beneficial owner of the Shares held by such Shareholder; (c) such Shareholder has good and marketable title to such Shares, free and clear of any liens, encumbrances or other adverse claims; and (d) such Shareholder will not take any action that would cause a breach of this Agreement.
3.1. Voting Agreement. Shareholders shall vote their Shares in accordance with this Agreement and applicable laws.
4.1. Right of First Refusal. If a Shareholder (the "Selling Shareholder") desires to sell, assign, transfer, pledge or otherwise dispose of any or all of its Shares (a "Proposed Transfer"), the Selling Shareholder shall first provide written notice to the Company and the other Shareholders (the "Right of First Refusal Notice") of the proposed terms and the identity of the proposed transferee. The Company and the other Shareholders shall have the right of first refusal to purchase the Shares proposed for transfer on the same terms and conditions set forth in the Right of First Refusal Notice. This right shall be exercisable for a period of thirty (30) days from the date of receipt of the Right of First Refusal Notice.
4.2. Tag-Along Rights. If the Selling Shareholder proposes to sell Shares to a third party (the "Third Party Purchaser") on terms more favorable to the Third Party Purchaser than those offered to the Company and the other Shareholders under the Right of First Refusal, the remaining Shareholders shall have the right to participate in the Proposed Transfer, on a pro rata basis, by selling a portion of their Shares to the Third Party Purchaser on the same terms and conditions offered to the Selling Shareholder.
5.1. Mediation. In the event of any dispute or claim arising out of or in connection with this Agreement, the disputing parties shall first attempt in good faith to resolve such dispute through non-binding mediation administered by a mutually agreed-upon mediator. The mediation shall be held in a location mutually agreed upon by the disputing parties.
5.2. Arbitration. If the disputing parties cannot resolve the dispute through mediation pursuant to Section 5.1, they shall submit the dispute or claim to final and binding arbitration in accordance with the rules of the American Arbitration Association (the "AAA") then in effect. The arbitration shall be held in a location mutually agreed upon by the disputing parties. Each party shall bear its own costs and expenses in connection with the arbitration, and the costs and expenses of the arbitrator(s) shall be borne equally.
6.1. Amendment. This Agreement may be amended or modified only by a written instrument signed by the Company and Shareholders holding at least two-thirds (2/3) of the issued and outstanding Shares.
6.2. Termination. This Agreement shall terminate upon the occurrence of any of the following events: (a) the unanimous written agreement of all Shareholders; (b) the dissolution, liquidation, or winding up of the Company; or (c) the sale of all or substantially all of the assets of the Company, or the merger or consolidation of the Company with or into another entity.
7.1. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and construed in accordance with the laws of the United States and the laws of the state in which the Company is incorporated, without regard to its conflicts of laws principles. The parties hereby agree to the exclusive jurisdiction and venue of the federal and state courts located in such state for the resolution of any disputes arising out of or in connection with this Agreement.
8.1. Entire Agreement. This Agreement, together with any exhibits, schedules, or other attachments, constitutes the entire agreement between the parties with regard to the subject matter hereof and thereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral, concerning such subject matter.
8.2. Severability. If any provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal, or unenforceable, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable.
8.3. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile or electronic copy of a signed counterpart of this Agreement shall be deemed an original for all purposes.
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In this Shareholder Agreement, you will see the following sections:
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