Shareholders Agreement
A Shareholder’s Agreement is a contract between the shareholders
and a company. The document defines the rights and responsibilities
of each party, provides a method for determining the value of the
shares, and sets out procedural rules should a shareholder terminate
their association with the company, for instance.
ALL INFORMATION AND FORMS ARE PROVIDED “AS IS” WITHOUT ANY WARRANTY,
EXPRESS, IMPLIED, OR OTHERWISE, INCLUDING AS TO THEIR LEGAL EFFECT AND
COMPLETENESS. They are for guidance and should be modified to meet your needs and the
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does not provide legal advice. The information and forms are not a substitute for the advice of
your own attorney.
SHAREHOLDERS AGREEMENT
This Shareholders Agreement is entered into as of the ________ day of _________,
20____, by and between __________________________________________________ (the
“Company”), and __________________________________, ________________and
_____________ (collectively referred to herein as the “Shareholders” and individually as a
“Shareholder”)
RECITALS:
A. The Shareholders own all of the outstanding shares of the Company’s capital stock as
set forth on Exhibit “A” attached hereto (the “Shares”).
B. It is the general policy of the Company to reserve control of the Company through
stock ownership for those active in the business.
C. The parties realize that a transfer of Shares to outsiders by a Shareholder occasioned
by the death of a Shareholder or a spouse or by the sale or other inter vivos disposition by a
Shareholder or the retention of Shares by a Shareholder after termination of his employment with
the Company, might disrupt the business, management, and harmonious control of the Company.
D. The parties desire to avoid such problems by providing for the optional or mandatory
purchase of a Shareholder’s Shares by the Company or the other Shareholders upon the
occurrence of certain events.
NOW, THEREFORE, in consideration of the foregoing and mutual promises herein
contained, the parties agree as follows:
ARTICLE 1
RESTRICTIONS ON THE TRANSFER OF SHARES
1.1 Transfers Restricted. To accomplish the purpose of this Agreement, any transfer, sale,
assignment, hypothecation, encumbrance or alienation of any of the Shares by a Shareholder
other than according to the terms of this Agreement is void and transfers no right, title or interest
in or to such Shares, or any of them to the purported transferee, buyer, assignee, pledgee or
encumbrance holder.
1.2 Share Legend. Each stock certificate representing the Shares shall have conspicuously
endorsed on its face or reverse side the following statement:
THE OWNERSHIP, SALE, TRANSFER, ASSIGNMENT, OR HYPOTHECATION OF
THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY THE
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PROVISIONS OF AN AGREEMENT AMONG THE CORPORATION AND ITS
SHAREHOLDERS, A COPY OF WHICH MAY BE INSPECTED AT THE PRINCIPAL
OFFICE OF THE CORPORATION, AND ALL THE PROVISIONS OF WHICH ARE
INCORPORATED BY REFERENCE IN THIS CERTIFICATE.
1.3 Inspection of Agreement. A copy of this Agreement duly executed by the Company
and each of the Shareholders shall be delivered to the Secretary of the Company and held by the
Secretary at the principal office of the Company, and shall be shown to any person making
inquiry regarding its terms and conditions.
ARTICLE 2
PERMITTED TRANSFERS
2.1 Written Permission to Transfer. Notwithstanding Section 1.1, a Shareholder may
transfer all or any Shares covered by this Agreement only if such Shareholder first obtains the
written permission of all of the other Shareholders and the Company. As a condition to the
validity of a Shareholder’s transfer of ownership of Shares hereunder (including, without,
limitation any pledge or hypothecation of any Shares), the transfer (APermitted Transferee”) and
his or her spouse, if any, shall agree in writing to hold such Shares subject to all the terms and
provisions of this Agreement (or any amended agreement necessitated by the transfer, which
amended agreement shall be included in the term Agreement) as if they were Shareholders, and
shall agree to make transfers thereof only as required and permitted for a Shareholder and his or
her spouse under this Agreement unless the Company and all of the Shareholders agree
otherwise. For purposes of this Agreement, the term Shareholders shall also mean a Permitted
Transferee.
2.2 Transfer to a Revocable Trust. A Shareholder may transfer all or a portion of Shares
to a revocable trust for the sole benefit of the Shareholder, his spouse or his lineal descendants,
without the written permission of the other Shareholders and the Company, provided said
Shareholder is the sole trustee of such trust empowered to vote or otherwise deal with the Shares
in any manner and prior written notice (together with a copy of the trust agreement) is given the
Company within thirty (30) days thereafter. The trustee shall hold such Shares subject to all the
provisions hereof, and shall make no further transfers other than as provided herein. Upon the
death, total disability or termination of employment of the transferor Shareholder, the successor
trustee or any cotrustee (and any subsequent transferee) shall be required to sell, transfer or
present said Shares for purchase as provided herein, for the price and on the terms hereafter set
forth as if such successor trustee and subsequent transferee were the transferor Shareholder. All
references herein to Shares shall be deemed to include Shares owned by any such successor
trustee or subsequent transferee, except that payment for such trustee and transferee Shares shall
be made to the trustee and transferee instead of to the original Shareholder or his estate.
2.3 Interest in Shares Created by Law. By operation of law, a community property, dower,
courtesy, or like interest (“Marital Interest”) may be created in the spouse of a Shareholder. Such
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Marital Interest shall be subject to the provisions of this Agreement as provided herein. The term
Shareholder includes the Shareholder’s spouse with respect to the spouse’s Marital Interest, and
reference to the Shares of a Shareholder shall include the Marital Interest of the Shareholder’s
spouse therein.
ARTICLE 3
LIFETIME DISPOSITIONS AND INVOLUNTARY TRANSFERS
3.1 Restriction on Transfer. No Shareholder shall transfer, assign, hypothecate, encumber,
pledge or otherwise alienate any of the Shares owned by said Shareholder or any right or interest
therein without the prior written consent of the Company and the other Shareholder (the “Non-
Offering Shareholder”) as provided in Section 2.1 above, or such Shareholder shall have
previously complied with all provisions of this Article 3.
3.2 Notice of Proposed Sale. In the event a Shareholder elects to transfer, assign,
hypothecate, encumber, pledge or otherwise alienate any of his Shares of stock in the Company
or any right or interest therein, such Shareholder first shall give written notice of his intention to
do so, via certified mail, to the Secretary of the Company. The notice of intention shall constitute
an irrevocable offer to sell (“Offer to Sell”) the Offered Shares during the Company and
Shareholder Option Periods, as defined below.
3.3 Requirements of Notice. The Offer to Sell from such Shareholder (AOffering
Shareholder”) must name the proposed transferee and specify the number of Shares, right or
interest, to be transferred, assigned, hypothecated, encumbered, pledged or alienated (“Offered
Shares”), the price, and the terms of payment and all other terms of the proposed transaction.
3.4 Failure to Serve Notice. Any such transfer, assignment, hypothecation, encumbrance,
pledge or other alienation not made in accordance with this Article 3 shall be null and void and
the Company shall not be obligated to treat the transferee in such transaction as a shareholder of
record or for any other purpose.
3.5 Company Option Period. For sixty (60) days following receipt of the Offer to Sell by
the Secretary (“Company Option Period”), the Company shall have the option to purchase all of
the Offered Shares, or a portion of the Offered Shares (provided, however, that the balance of the
Offered Shares are purchased by the Non-Offering Shareholders pursuant to this Article 3) at the
price and on the other terms stated in the Offer to Sell.
3.6 Shareholder Option Period. If the Company fails to exercise said option as to all of
the Offer Shares, the Secretary shall give written notice thereof immediately after the expiration
of the Company Option Period to all of the Non-Offering Shareholders who shall have the option
to purchase the remaining Offered Shares at the price and on the terms stated in the Offer to Sell.
For thirty (30) days following the mailing of such notice by the secretary (“Shareholder Option
Period”), each Non-Offering Shareholder shall have the option to acquire all or any part of the
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remaining Offered Shares as provided herein.
3.7 Exercise of Option by Shareholders. Non-Offering Shareholder may exercise the
option to purchase any or all of the remaining Offered Shares by delivering to the Secretary a
written election within the Shareholder Option Period. If the total number of Shares specified in
such elections exceeds the number of remaining Offered Shares, each Non-Offering Shareholder
shall have priority up to the number of Shares specified in such Shareholders written election, to
purchase such proportion of the remaining Offered Shares as the number of the Company’s
shares which such Shareholder holds bears to the total number of the Company’s Shares held by
all the Non-Offering Shareholders electing to purchase.
3.8 Payment by Shareholders. Promptly after the expiration of the Shareholder Option
Period, or, if the Company has elected to purchase all of the Offered Shares, after the Company
Option Period, the Secretary shall notify the Shareholders and the Company of the outcome of
the option election(s). The Company and each Shareholder electing to purchase shall, within
thirty (30) days of mailing of said notice, deliver to the Offering Shareholder the consideration
set forth in the Offer to Sell.
3.9 Option to Purchase All Shares. Neither the Company nor any Non-Offering
Shareholders have the right to purchase any portion of the Offered Shares pursuant to this Article
3 unless all Offered Shares are so purchased.
3.10 Failure to Purchase All Shares. In the event the Offered Shares are not purchased by
the Company or the Non-Offering Shareholder hereunder, said Shares or interest therein may be
transferred at any time within a sixty (60) day period commencing One Hundred Twenty (120)
days from the date of the Offering Shareholder’s Offer to Sell to the proposed transferee,
provided, however, that in no event shall such transfer include less than all of the Offered Shares;
and provided further that any transferee of ownership hereunder and his or her spouse first agree
by execution of a copy of this Agreement to hold such Shares subject to all the provisions of this
Agreement (such transferee holding Shares subject to this Agreement to be included in the term
Shareholder herein), unless Company and the other Shareholder agree otherwise, and on the
terms specified therein, provided that immediately upon such transfer, the proposed transferee
executes and becomes bound by this Agreement and any amendments or revisions hereto. Such
proposed transferee shall receive and hold said Shares subject to all of the provisions herein
contained. If such transfer is not made during such sixty (60) day period on the terms specified in
the Offer to Sell, the Offered Shares shall again become subject to all the restrictions of this
Agreement.
3.11 Reorganization. Any rights to purchase the Shares of the Company pursuant to this
Article 3 shall not apply with respect to any proposed transfer necessary to accomplish any
merger, reorganization, business combination or sale of at least eighty percent of the outstanding
stock of the Company. The conversion of the Shares to other securities pursuant to a
reorganization in which the Company is the surviving corporation shall not constitute a transfer
of the Shares or a termination of a Shareholder’s employment by the Company within the
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meaning of this Agreement, but the Shares as converted shall continue to be subject to this
Agreement. Securities received pursuant to any stock dividend, stock split or other
recapitalization shall be subject to this Agreement to the same extent as the Shares with respect
to which they were issued.
3.12 Involuntary Transfers. In the event of any (i) receivership, bankruptcy, stay or
creditors proceeding regarding a Shareholder, or (ii) taking of any Shares of a Shareholder by
legal process (such as levy of execution), all or any of the Shares owned by such Shareholder (or
a trust for his benefit) shall be subject to the terms of this Agreement. In the event a sale or
transfer is proposed pursuant to such a judicial order or action (the “Order”), all of the terms of
the options under this Article 3 shall apply, with the following modifications: Instead of the Offer
to Sell being delivered by the Offering Shareholder, a copy of the Order shall be delivered to the
Company and the Non-Offering Shareholder by the proposed transferee, which copy shall state
the name and address of the proposed transferee and specify the number of Shares to be
transferred or sold, the consideration per share if any, and the terms of the transfer. For all other
purposes of this Article 3, the delivery of the Order shall be treated as delivery of the Offer to
Sell. Any purported transfer in contravention of this Section 3.9 shall be null and void and shall
pass no title to the purported transferee.
ARTICLE 4
TERMINATION OF EMPLOYMENT
4.1 Termination. In the event any Shareholder should cease to be an employee of the
Company, for any reason whatsoever, voluntarily or involuntarily, other than his death or
Disability (defined below), (“Terminated Shareholder”), all of the Shares then owned by the
Terminated Shareholder and his spouse, if any, and any trust for his or his spouse’s benefit, may
be purchased by Company and/or the non-terminated Shareholders as provided herein.
4.2 Purchase. In the event an employee specified in Section 4.1 above becomes a
Terminated Shareholder, all of the Shares owned just prior to such event by such Shareholder
(including all Shares held by any trust for his or his spouse’s benefit or his spouse with respect to
a Marital Interest) shall be subject to the options and administrative provisions set forth in Article
3 hereof except that the date the Shareholder ceased to be an employee of the Company shall be
the date upon which the Secretary received an Offer to Sell from such Shareholder. The price and
terms of the Offer to Sell under this Section 4.2, shall be a price per share determined under
Article 6 in accordance with the terms under Article 7.
ARTICLE 5
DEATH OR DISABILITY
5.1 Sale on Death or Disability. Upon the death or Disability (as defined in Section 5.2)
of any Shareholder, all Shares owned just prior to such event by such Shareholder (including all
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Shares held by Shareholder’s Permitted Transferee(s), estate or legal representative, any trust for
his or his spouse’s benefit, or by the Shareholder’s spouse with respect to a Marital Interest) (the
“Event Shares”), shall be purchased by the Company as herein provided.
5.2 Disability. “Disability” as used herein shall mean any physical or mental condition of
a Shareholder resulting from a bodily injury diseases or mental disorder which prevents the
Shareholder from performing his/her normal employment activities and duties as an officer and
director of the Company for a period of thirty (30) days as reasonably determined by a physician
or other outside professional entity of the Company’s choosing (the APhysician”). The
Shareholder shall, if requested by the board of directors, submit to a mental or physical
examination to assist the Physician to make its determination. Failure to comply with this request
shall stop the Shareholder from challenging the Physician’s determination. Within ten (10) days
of the Physician’s determination of Disability, the board shall deliver to the Secretary of the
Company written notification that a Shareholder is disabled, the receipt of which shall constitute
the date of the commencement of the Shareholder’s disability (the “Disability Date”).
5.3 Purchase by Company. The Company shall purchase all of the Event Shares at a
purchase price per Share equal to the value determined under Article 6, provided however, that
the obligation of the Company to repurchase all or any portion of the Event Shares shall be
subject to the ability of the Company to comply with the general laws of the California
Corporations Code covering the repurchase of such Shares.
5.4 Closing of Purchase. Subject to any delay resulting from legal requirements or causes
beyond the reasonable control of the Company, the closing of such purchase and sale shall take
place at the offices of the Company at a date designated by the Company, which shall not be
more than one hundred eighty (180) days following the date of receipt by the Secretary of notice,
as the case may be, of (i) the Shareholder’s death from the personal representative of decedent
Shareholder, or (ii) a determination by the board of directors of the Company that Shareholder is
disabled.
5.5 Shareholder’s Obligations. If the Company fails to purchase timely all of the Event
Shares, the remaining Shareholders shall purchase all of the Event Shares not purchased by the
Company on the terms set forth in this Article 5. The obligations of the remaining Shareholders
herein shall be pro rata to their respective shareholdings in the Company.
ARTICLE 6
PURCHASE PRICE
6.1 Agreed Upon Value. Within the first ninety (90) days after the end of each fiscal year
of the Company, the Shareholders holding a majority of the Shares (the “Majority Shareholders”)
shall determine the fair value of the Shares by agreement. The fair value so determined shall be
the purchase price of the Shares. Except as provided elsewhere in this Agreement, such purchase
price shall remain in effect until the next determination under this Section. The Majority
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Shareholders may redetermine the purchase price of the Shares more frequently than annually in
the discretion of the Majority Shareholders, except in circumstances where an event giving rise to
a right to purchase or sell Shares pursuant to this Agreement had occurred and such
determination would be used to determine the purchase price of such Shares.
6.2 Absence of Agreement.
(a) Second Chance to Agree. If the Shareholders have not determined the fair
value of the Shares at least twelve (12) months before an event occurs that gives rise to a right to
purchase or sell Shares under this Agreement, the Shareholders shall have thirty (30) days after
the occurrence of the event to agree upon the fair value of the Shares. Any fair value determined
under this Section must be agreed upon by holders of two-thirds (2/3) of the Shares to be sold (as
provided in subsection 6.2(b)) and by the prospective purchasers of two-thirds (2/3) of the Shares
to be purchased (as provided in subsection 6.2(c)).
(b) Multiple Sellers. Except as otherwise provided in this Agreement, any
action or consent approved in writing with respect to the holders of a majority of the Shares to be
purchased shall be the action or consent of all of the sellers with regard to any instance giving
rise to a right to require a person to sell or purchase Shares in which more than one person:
(i) is obligated to sell Shares subject to no conditions other than
performance by the buyer(s); or
(ii) has agreed to sell Shares subject to no conditions other than
performance by the buyer(s), regardless of the purchase price determined for the Shares.
(c) Multiple Buyers. Except as otherwise provided in this Agreement, any
action or consent approved in writing with respect to the prospective purchasers of a majority of
the Shares they are obligated to buy or have so agreed to buy shall be the action or consent of all
the buyers with regard to any instance giving rise to an obligation to buy Shares or a right to
require a person to sell Shares in which there is more than one person who has agreed or is
obligated to buy Shares under this Agreement subject to no conditions other than performance by
the seller(s), regardless of the purchase price determined for the Shares.
6.3 Alternative Net Book Value. If the parties are unable to agree upon the fair value of
the Shares, the fair value of each Share shall be a value equal to the net book value per share of
the common stock of the Company determined on a fully diluted, fully converted basis as of the
last day of the preceding fiscal year, as determined by the independent accountants of the
Company based on their review, but not necessarily an audit, of the Company’s financial
statements. “Net Book Value” shall be calculated using the historical cost of the Company’s
assets as reflected on its financial statements decreased by any depreciation, amortization or other
cost recovery method consistently applied for financial accounting purposes. “Net Book Value”
shall not include any unrealized gain or loss on the Company’s assets or the value, if any, of the
Company’s goodwill or other assets that are not reflected on the Company’s financial statements.
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ARTICLE 7
TERMS OF PURCHASE
7.1 Terms. Except as otherwise provided in this Article 7, the payment of the purchase
price for Shares purchased under this Agreement shall be made to the selling party on the
purchase date as follows:
(a) a certified or bank cashier’s check payable to the order of the selling party
in the amount of the greater of twenty percent (20%) of the purchase price, or the proceeds of any
insurance received by the Company as a result of the event triggering the purchase but in no
event shall the down payment exceed the purchase price; and
(b) a promissory note in substantially the form attached hereto as Exhibit B
representing the balance, if any, of the purchase price, with interest thereon at a rate equal to
three percent (3%) over the Bank of America published “prime” or “reference” rate as quoted on
the date of the event giving rise to the purchase, per annum, principal and interest payable in
forty-eight (48) equal monthly installments.
7.2 Offsets. In any purchase hereunder by the Company, the Company may offset against
its first payments all amounts owed to the Company by the seller, whether or not such amounts
owed by seller are yet due. Any purchase by a purchaser other than the Company is contingent
upon concurrent execution of a pledge agreement in a form and designating a pledgeholder as
agreed by the buyer and seller, under which agreement the shares purchased will be held in
pledge to secure all payments due under the note, if any.
7.3 Insurance Proceeds. The purchase price per share shall be paid in cash if the Company
receives insurance proceeds from a life insurance or disability insurance policy on the life of a
Shareholder in an amount equal to or greater than the total purchase price for all Shares being
purchased. If the net amount of insurance proceeds is less than the total amount to be paid for the
Event Shares required to be purchased under this Agreement, the Company shall make a down
payment equal to the greater of (i) the amount of such insurance proceeds which the Company
does receive, or (ii) twenty percent (20%) of the purchase price. The balance shall be paid by a
promissory note in accordance with Section 7.1(b).
ARTICLE 8
COMMUNITY PROPERTY OWNERSHIP
8.1 Ownership. Shares of the Company shall be deemed to be owned exclusively by the
owner of record, and any transfer by gift, will, dissolution of marriage or otherwise to a
Shareholder’s spouse shall be deemed a disposition of the Shares to a non-permitted transferee,
subject to the provisions of this Agreement.
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8.2 Disposition at Death of Spouse. In the event the spouse of a Shareholder shall
predecease such Shareholder, all of the Shares then owned by such Shareholder’s spouse or a
trust in which he or she is a trustee or a beneficiary, and which under the terms of the trust or the
laws of testate or intestate succession would pass to someone other than (i) the Shareholder, (ii) a
Permitted Transferee, or (iii) a trust of which the Shareholder is a trustee and under which the
Shareholder is entitled to receive all income from the Shares, (and, in any event, a trust which
could qualify as a “qualified subchapter S trust”) shall be subject to an option in favor of the
surviving Shareholder to purchase the interest of the predeceased spouse, exercisable during the
sixty (60) day period immediately following receipt by the surviving Shareholder of notice of
such attempted disposition at the value determined in Article 6 and on the terms provided in
Article 7 of this Agreement.
8.3 Dissolution of Marriage. If, upon the dissolution of a Shareholder’s marriage or the
legal separation of a Shareholder and his spouse, any Shares would be owned as separate
property of such Shareholder’s spouse, then that Shareholder shall have an option to purchase
said interest, exercisable for sixty (60) days after the date of notice of dissolution or legal
separation, at the value determined in Article 6 and on the terms provided in Article 7 of this
Agreement.
8.4 Failure to Exercise Option. If such Shareholder described in Sections 8.2 or 8.3 fails
to exercise said option to purchase within the sixty-day period, the options and administrative
provisions set forth in Article 3 hereof shall apply as to those Shares except that the sixtieth
(60th) day following (i) notice of attempted disposition under Section 8.2, or (ii) notice of
dissolution or legal separation under Section 8.3 shall be the date upon which the Secretary
received an Offer to Sell from such Shareholder. The price and terms of the Offer to Sell under
this Section 8.4 shall be a price per share determined under Article 6, on the terms provided in
Article 7.
8.5 Voluntary Transfer. Any voluntary attempt of a Shareholder to change the community
property nature of his or her Shares by transferring either beneficial or record title of the Shares
to his or her spouse shall be considered an attempted sale and shall be subject to the terms of
Article 3. Any attempted involuntary transfer of either beneficial or record title of Shares from a
Shareholder to his or her spouse shall be subject to the terms of Article 4.
ARTICLE 9
INSURANCE
9.1 Insurance Policies. Each Shareholder and spouse hereby agree that, at the option of
the Company, application for a purchase of life insurance or disability policy or policies on the
life of any Shareholder or any Shareholder’s spouse may be made by the Company in order to
fund in whole or in part any purchase of Shares allowed to be made by the Company hereunder
on the death or disability of any of such persons. The Company shall be designated the
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beneficiary under any such life insurance policy. Each Shareholder and spouse further agree to
cooperate fully in the application for and purchase of all life insurance policies acquired
hereunder.
9.2 Disbursement of Insurance Proceeds. If, by reason of an event triggering a purchase
option under Articles 4, 5 and 8, the Company receives proceeds from a life insurance or
disability insurance policy owned by the Company, such proceeds (the AProceeds”) must be held
in an account with a bank, savings and loan association or similar financial institution, under
which the Proceeds may be withdrawn on thirty days’ notice, until (i) the option to purchase
Shares which was triggered by the event is fully exercised by the Company and the Shareholders,
in which case the Proceeds may be used to fund such a purchase by the Company, (ii) the person
who would be required to sell the Shares if the option was exercised consents in writing to
unrestricted use of the Proceeds, or (iii) five (5) years from the event triggering the option,
whichever is earlier.
ARTICLE 13
MISCELLANEOUS
10.1 Termination of Agreement. This Agreement shall terminate:
(a) at any time upon the written agreement of the Company and all the
Shareholders of the Company then signatory to this Agreement as amended or revised;
(b) immediately upon the dissolution, bankruptcy or insolvency of the
Company;
(c) immediately at such time as a registration statement in Form S-1 (or
equivalent form of registration statement filed for the public sale of Shares of the Company for
cash) is declared effective by the Securities and Exchange Commission; or
(d) upon the acquisition of the Company by merger, sale of assets, sale of
stock or otherwise, in a tax-free or taxable transaction in which all holders of the Company’s
shares as such fail to obtain or hold fifty-one percent (51%) of the voting power of the surviving
entity.
10.2 Further Assurances. Each party hereto shall, from time to time at and after the date
first set forth above, execute and deliver such instruments, documents and assurances and take
such further actions as any other party may reasonably request to carry out the provisions of this
Agreement.
10.3 Successors and Assigns. This Agreement shall bind and inure to the benefit of the
successors, assigns, personal representatives, heirs and legatees of the respective parties.
Notwithstanding the foregoing, no Shareholder may assign his right to purchase Shares hereunder
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without the unanimous written consent of all other then Shareholders.
10.4 Parties of Interest. Nothing in this Agreement is intended to confer any rights or
remedies under or by reason of this Agreement on any person other than the parties to it and their
respective successors and assigns. Nothing in this Agreement is intended to relieve or discharge
the obligation or liability of any third party to this Agreement. No provision of this Agreement
shall give any third persons any right of subrogation or action over or against any party to this
Agreement.
10.5 Amendment; Waiver. This Agreement shall not be changed or modified, in whole or
in part, except by supplemental agreement signed by all the parties. Any party may waive
compliance by any other with any of the covenants or conditions herein, but no waiver shall be
binding unless executed in writing by the party making the waiver. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing waiver.
10.6 Specific Performance. The parties hereby declare that it is impossible to measure in
money the damages which will result from a failure to perform any of the obligations under this
Agreement. Therefore, each party hereto waives the claim or defense that an adequate remedy at
law exists in any action or proceeding brought to enforce the provisions hereof.
10.7 Attorneys’ Fees. In the event litigation should be initiated to enforce or interpret any
term or provision of this Agreement, the prevailing party in such litigation shall be entitled to
recover all costs incurred in connection therewith, including, without limitation, reasonable
attorney’s fees.
10.8 Notice. Any and all notices or any other communication provided for herein shall be
given in writing by registered or certified mail which shall be addressed, in the case of the
Company, to its principal office, and in the case of any Shareholder, to such Shareholder’s
address appearing on the books of the Company or to such other address as may be designated by
such Shareholder.
10.9 Severability. The invalidity or unenforceability of any particular provision of this
Agreement shall not affect the other provisions hereof and the Agreement shall be construed in
all respects as if such invalid or unenforceable provisions were omitted.
10.10 Governing Law. This Agreement shall be construed, performed and enforced in
accordance with the laws of the State of _______________.
10.11 Entire Agreement. This instrument constitutes the entire agreement of the parties
relating to the purchase of stock or redemption of stock of the Company. Any prior agreements,
promises, negotiations or representations not expressly set forth in this Agreement are hereby
rendered void and of no force or effect.
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10.12 Captions and Headings. The captions or headings of the Articles and Sections of
this Agreement are for reference only and are not to be construed in any way as part of this
Agreement.
10.13 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute one instrument. A
party may deliver this Agreement by transmitting a facsimile copy of the signed signature page to
the other party or parties.
IN WITNESS WHEREOF, the undersigned have executed or caused this Agreement to
be executed as of the date first written above.
COMPANY:
_________________a California corporation
By: __________________________
Its:___________________________________
SHAREHOLDERS:
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