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Shareholders Agreement with Put and Call Option

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This is an agreement between the shareholders of a small corporation that defines the rights and obligations of each shareholder. This particular agreement provides a “Put and Call Option” whereby a shareholder that desires to sell their shares in the company must first offer their shares to the corporation or other shareholders for purchase. If the corporation or the other shareholders do not purchase the shares, the transferring shareholder may have the right to dissolve the corporation. This agreement should be used by the shareholders of a small business that want to provide a “Put and Call Option” in their shareholders agreement.

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									This is an agreement between the shareholders of a small corporation that defines the
rights and obligations of each shareholder. This particular agreement provides a “Put
and Call Option” whereby a shareholder that desires to sell their shares in the company
must first offer their shares to the corporation or other shareholders for purchase. If the
corporation or the other shareholders do not purchase the shares, the transferring
shareholder may have the right to dissolve the corporation. This agreement should be
used by the shareholders of a small business that want to provide a “Put and Call
Option” in their shareholders agreement.
                                SHAREHOLDERS AGREEMENT

THIS AGREEMENT made and entered into as of this ________ day of ____________,
201________ [Instruction: insert date].

BETWEEN ____________________________ [Instruction: insert company name] (the
“Company”), a company organized and existing under the laws of the state of
___________________, [Instruction: insert state name] with its head office located at
___________________________________________, [Instruction: insert address]

AND

_______________________ [Instruction: insert shareholder name], residing at
______________________________________________________________________,
[Instruction: insert address]

AND

________________________ [Instruction: insert shareholder name], residing at
______________________________________________________________________,
[Instruction: insert address]

AND

________________________ [Instruction: insert shareholder name], residing at
______________________________________________________________________,
[Instruction: insert address]

(Collectively referred to as “Shareholders”)

[Instruction: Delete or cross out any unnecessary name placeholders, above.        Add
additional lines, as needed, if there are more than 3 shareholders.]

                                           RECITALS

WHEREAS, all of the issued shares and outstanding stock of the Company are owned by the
Shareholders hereunder in the following percentages:


Name                                           Number of Shares

_______________________ [Instruction:          ________ [Instruction: insert
insert shareholder name]                       number of shares]

________________________ [Instruction:         ________ [Instruction: insert
insert shareholder name]                       number of shares]


© Copyright 2011 Docstoc Inc.                                                  2
________________________ [Instruction:            ________ [Instruction: insert
insert shareholder name]                          number of shares]

[Instruction: Provide the name of each shareholder, as well as the number of shares owned
by each person, in the spaces provided, above. Delete unnecessary boxes. Add additional
boxes, as needed, if there are more than 3 shareholders.]

WHEREAS, it is in the best interest of the Company and in order to insure harmonious and
successful management and control of the Company, and to make provision for the manner and
method by which a Shareholder may dispose of his shares.

NOW, THEREFORE, in consideration of the mutual promises of the parties hereto and intending
to be legally bound, the parties hereby agree as follows:

    1. Directors

For the term of this Agreement, the Shareholders shall act as the Directors of the Company. The
Directors shall have the authority to take any actions that they deem to be appropriate and
necessary for the smooth and efficient management of the Company.

    2. Officers

The following individuals shall serve as Officers of the Company:

President _________________________ [Instruction: insert name]

Treasurer _________________________ [Instruction: insert name]

Vice President __________________ [Instruction: insert name]

Secretary ______________________ [Instruction: insert name]

    3. Unanimous Consent

The Company shall not, without vote by a special majority of at least eighty percent (80%) of the
issued and outstanding shares of the Company, do any of the following acts set forth below:

    (a) Any amendment or additions to the Articles of Organization and/or to the Bylaws of the
        Company or reconstitution or reclassification of the board of directors;

    (b) Any merge or consolidation with or into any other company, or reconstruction or
        amalgamation of the business of the Company, nor any entrance into any partnership or
        profit sharing agreement with any other person or corporation;

    (c) Any sale, lease, exchange, transfer, or disposition of all or substantially all of the assets,
        business or property of the Company


© Copyright 2011 Docstoc Inc.                                                             3
    (d) Any borrowing of money, other than in the ordinary course of Business, from any third
        party or entity or any creation of any encumbrance (other than a lien arising by operation
        of law) over the whole or any part of its undertaking, property or assets;

    4. Death Or Disability of a Management Shareholder

Upon any permanent disability or death of a managing shareholder, or upon the ending of a
major shareholder’s employment, such Shareholder or his heirs, executors, guardian or personal
representative within ______________ [Instruction: insert number of days] days after such
event shall offer to sell all of the shares owned by such Shareholder. The offer must be first made
to the Company in writing and Company shall have _____________ [Instruction: insert
number of days] days after such offer has been received by the Company. If the Company fails
to purchase all Shares offered, the offer will then be made to other Shareholders and such offer
shall exist for a period of ______ [Instruction: insert number of days] days after the offer has
been received by the other Shareholders.

    5. Lifetime Sale of Shares

A Shareholder shall have no rights to sell, transfer, pledge, hypothecate or assign or in any way
dispose of all or any part of the shares owned by him except by making sale to the Company or
the other Shareholder in the following manner:

    (a) In the event if a Shareholder desires to dispose of his/her stocks, he/she shall first offer
        his/her shares to the Company and thereafter to the other Shareholder at such price and
        on such terms and conditions as Shareholder and the Board of Directors may mutually
        agree. The Shareholder shall first give written notice to the Company and the other
        Shareholders of his/her intention to dispose of his/her stocks, mentioning the number of
        Shares he/she desires to dispose of, the proposed purchase price and also attach a copy of
        the offer received by the Shareholder.

    (b) The Company shall have exclusive right and the first option to purchase all of the Shares
        which the offering shareholder proposes to sell. The Company shall exercise its right to
        purchase the Shares by giving a notice to the offering shareholder within _____________
        [Instruction: insert number of days] days after receipt of the notice from offering
        shareholder. The notice should state that the Company elects to purchase the Shares on a
        specific date and time for closing.

    (c) If the Company fails to purchase all of the stock offered for sale or fails to accept the
        offer within ________________ [Instruction: insert number of days] days from the
        receipt of the offer for sale, then the remaining Shareholders shall have the option to
        purchase all or the remaining shares. Any remaining Shareholders, if they desire to
        purchase the stock offered, shall indicate their acceptance to the offering shareholder,
        within __________________ [Instruction: insert number of days] days after the receipt
        of the original offer.

    (d) In the event if both the Company and the other Shareholders elect not to purchase all of
        the Shares which the offering Shareholder proposes to sell, the offering Shareholder may


© Copyright 2011 Docstoc Inc.                                                           4
        accept the offer of any third party buyer and transfer all Shares to such a third party upon
        the completion of such a sales transaction.

    6. Right of First Refusal

    (a) The Company shall not issue, sell, transfer or exchange or agree to sell, transfer or
        exchange:

                (i)     any shares of the common stock of the Company or any equity of the
                        Company that is convertible into common stock; or

                (ii)    any debt security of the Company that can be converted into common
                        stock; or

                (iii)   any option, warrant or other right to subscribe for, purchase, or otherwise
                        acquire any security interest or any such debt security of the Company,

Unless, in all three of the above case, the Company has first offered to sell to the Shareholders,
in proportion to their ownership of shares in the Company. Such shares and equity shall be
offered at a price, and upon such terms, as have been specified by the Company in writing to the
Shareholders. Such an offer shall remain open for a period of ______________ [Instruction:
insert number of days] days from the date it is offered by the Company to the Shareholders.

    (b) The Shareholders may submit a notice of acceptance specifying their intention to accept
        the offer in writing prior to the expiry of the period specified in the offer by the
        Company. In the event that the Shareholders fail to give their notice of acceptance within
        the specified time period, the Company shall sell the shares to which no notice of
        acceptance has been given to any person or persons and upon such terms and conditions
        that are no more favorable to such person or person and less favorable to the interests of
        Company.

    7. Put & Call Option

Any Shareholder shall, at any time, have the right to offer for sale of his shares in the Company
to the Company and then to the other Shareholders in proportion to the shares held by them; and
if all such shares are not purchased either by the Company or by the other shareholders within
_________________ [Instruction: insert number of days] days of the offer, then such
Shareholder shall, for a period of _________________ [Instruction: insert number of days]
days after the termination of all offers, have the right to require the dissolution of the Company;
provided, however, that if a Shareholder exercises his right to make such a demand and does not
thereafter elect to require the dissolution of the Company, then neither such Shareholder nor any
other owner of those unpurchased shares shall thereafter have the right to make such a demand or
cause such a dissolution at any time within _______________ [Instruction: insert number of
years] years after the expiration of the thirty-day period within which the right to require
dissolution could have been exercised.

    8. Action in Violation of This Agreement


© Copyright 2011 Docstoc Inc.                                                           5
In the event the shares of any Shareholder are sold, transferred or disposed of in any manner
contrary to the provisions of this Agreement, or if any shares of the Company are taken in
execution or sold in any voluntary or involuntary legal proceeding, execution sale, bankruptcy,
insolvency or in any other manner, the Company and the Shareholder shall, in addition to any
other rights and remedies available hereunder, be entitled to purchase such shares from the
transferee thereof, under the same terms and conditions as set forth in this Agreement as if the
transferee had offered to sell such shares, however in no event shall the purchase price exceed
the amount paid for the said shares by the transferee if such shares were acquired by the
transferee for consideration.

    9. Termination

This Agreement shall come into effect from the date set forth above and shall remain in full force
and effect for as long as the Shareholders continue to be the shareholders of the Company, or
until the adjudication of the Company as a bankrupt or until the dissolution of the Company.

    10. Confidentiality

The parties hereto agree that all information, data and material relating to the financial, technical,
marketing or other matters disclosed by a party to another party (hereinafter, "Confidential
Information") pursuant to this Agreement is confidential. Such information, data or other
material shall not be used for any other purpose except for the purpose for which it was disclosed
except with prior written consent of the disclosing party.

Notwithstanding anything to the contrary, this clause shall not apply to information:-

    (a) That is in the public domain or becomes public knowledge without the default of the
        receiving Party; or

    (b) Was already known by the receiving Party prior to the date of its receipt from the
        disclosing Party; or

    (c) Is obtained by the receiving Party from a bona fide third party having free right of
        disposal of such information.

    11. Waiver

No waiver or modification of any of the provisions of this Agreement or any of the rights or
remedies of the parties hereto shall be valid unless such change is in writing, signed by the party
to be charged therewith. No waiver of any of the provisions of this Agreement shall be deemed a
waiver of any other provision.

    12. Amendment

No modification, variation or amendment of this agreement shall be of any force unless it is in
writing and has been signed by all the Parties.

    13. Entire Agreement

© Copyright 2011 Docstoc Inc.                                                             6
This Agreement shall constitute the entire agreement between the parties in relation to its subject
matter and replaces any and all prior agreements, undertakings, arrangements, understandings or
statements of any nature made by the parties or any of them whether oral or written with respect
to the subject matter. Each of the parties acknowledges that it is not relying on any statements,
warranties or representations given or made by any of them in relation to the subject matter
hereof, save those expressly set out in this Agreement, and that it shall have no rights or
remedies with respect to such subject matter otherwise than under this Agreement.

    14. No Assignment / No Partnership

No Party shall assign or agree to assign this agreement in whole or in part without the prior
written consent of all the other Parties. No Party shall have the right or authority to bind any
other Party or to act as agent of any other Party.

    15. Governing Law

This agreement shall be governed by and construed in accordance with the laws of the state of
______________. [Instruction: insert state name]

    16. Arbitration

All disputes under this Agreement shall be settled by arbitration in the county of
_________________ [Instruction: insert county name], before a single arbitrator, pursuant to
the commercial law rules of the American Arbitration Association. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto, and all parties agree to waive
any right to appeal any arbitration decision.

    17. Force Majeure

No party shall be liable to any other for failure to perform any obligations hereunder to the extent
and for such period as such failure is due to reasons outside that party's reasonable control
including fire, flood or other natural catastrophe, war, riot or civil disturbance or governmental
action, order or decree. The party so affected shall continue to take all actions reasonably within
its power to comply as far as possible with its obligations. The affected party shall promptly
notify the other party after the occurrence of the relevant event and shall use every reasonable
effort to minimise the effects of such event.

    18. Notices

Any notice, request, consent or other communication to be given by a party under this agreement
shall be in the English language in a writing addressed to the address mentioned in the
introductory paragraph of this Agreement or to such other address for a party as may be notified
in writing by that party to the other party. All important notices should be dispatched by such
means where receipt is evidenced.

    19. Counterparts



© Copyright 2011 Docstoc Inc.                                                           7
This agreement shall be executed in any number of counterparts, each of which shall be deemed
an original but all of which shall constitute one and the same instrument.

    20. Waiver

No waiver by any Party at any time of any breach of any of the terms and conditions of this
agreement shall be incorporated as a waiver of any subsequent breach, whether of the same or
any other terms and conditions of this Agreement.

    21. Severability

If any provision of this Agreement shall be determined by the arbitrators or any Court having
jurisdiction, to be invalid, illegal or unenforceable, the remainder of this Agreement shall not be
affected thereby, but shall continue in full force and effect as though such invalid, illegal or
unenforceable provision or provisions were not originally a part hereof.

IN WITNESS WHEREOF the authorised representatives of the Parties have hereunto duly
executed and delivered this agreement the day and year first above written.

SHAREHOLDER # 1 (name and signature)

_____________________________________



SHAREHOLDER # 2

_____________________________________



SHAREHOLDER # 3

_____________________________________

[Instruction: insert or redact signature lines as necessary]




© Copyright 2011 Docstoc Inc.                                                          8

								
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