Shareholder Agreement - Template, Sample Form Online Pro · US-law
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SHAREHOLDER AGREEMENT
This Shareholder Agreement (this "Agreement") is made and entered into as of ________ (the "Effective Date"), by and among the following parties:
________, a corporation organized and existing under the laws of the State of ________ (the "Corporation"), having its principal place of business at:
________
and the following persons, who shall hereinafter be referred to collectively as the "Shareholders" and individually as a "Shareholder":
________, residing at:
________
________, residing at:
________
The Corporation and the Shareholders are referred to herein collectively as the "Parties" and individually as a "Party."
RECITALS
WHEREAS, the Shareholders are each and all of the shareholders of the Corporation and collectively own all of the issued and outstanding capital stock of the Corporation;
WHEREAS, the Parties desire to enter into this Agreement to provide for the management, control, and governance of the Corporation, and to set forth their respective rights and obligations with respect to the ownership, voting, and transfer of shares, the distribution of profits, and related affairs; and
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE 1 — SHARES
§ 1.1 The Shareholders each own the following number of shares of common stock of the Corporation, corresponding to the approximate percentage ownership set forth below:
________: ________ shares, ________% ownership
________: ________ shares, ________% ownership
§ 1.2 The shares held by the Shareholders as listed above constitute all of the issued and outstanding capital stock of the Corporation. Each Shareholder acknowledges receipt of certificates (or uncertificated equivalents) representing such Shareholder's shares, and the Corporation acknowledges that it has received full and adequate consideration for all such shares. All shares of the Corporation, whether now issued and outstanding or hereafter issued, shall be subject to the terms and conditions of this Agreement.
ARTICLE 2 — MANAGEMENT AND CONTROL
§ 2.1 Directors. Each Shareholder shall serve as a director of the Corporation (a "Director" and collectively, the "Directors"), subject to the terms and conditions of this Agreement. Together, the Directors shall constitute the Board of Directors (the "Board").
The Shareholders shall hold one regularly scheduled meeting annually, and such additional meetings as may be called in accordance with the Bylaws of the Corporation and applicable law. Any Shareholder may authorize another person to act as such Shareholder's proxy at any meeting, provided that specific written instructions are furnished by the authorizing Shareholder and the proxy otherwise complies with applicable law.
The primary responsibility of the Board shall be to protect and advance the interests of the Corporation as a whole, separate and apart from the interests of any individual Shareholder or group of Shareholders, and to ensure that the Corporation complies with all applicable laws, acts ethically at all times, and adheres to its corporate purpose.
The Board shall have the power and authority to, among other things:
(I) conduct the business of the Corporation in accordance with applicable law and sound business practices;
(II) determine the current assets of the Corporation for the purpose of establishing whether and when distributions shall be made;
(III) maintain the records, books, and all other documents required for corporate accountability under the laws of the State of ________;
(IV) furnish the Shareholders with a report, at least annually, for approval of distributions and other matters of financial accountability;
(V) prepare and file any and all formation, qualification, and maintenance documents required for the Corporation under the laws of the State of ________.
The Directors shall be elected each year at the annual meeting of the Shareholders.
§ 2.2 Officers. The officers of the Corporation (the "Officers") shall be as follows:
President: ________
Vice President: ________
Treasurer: ________
Secretary: ________
The President shall also serve as the Chief Executive Officer ("CEO") of the Corporation and shall be responsible for managing the day-to-day operations of the Corporation and for reporting to the Board on a regular basis. The President may undertake the following actions as part of the President's everyday duties:
________
The President's annual salary shall be $________ (________).
The Vice President may undertake the following actions as part of the Vice President's everyday duties:
________
The Vice President's annual salary shall be $________ (________).
The Treasurer may undertake the following actions as part of the Treasurer's everyday duties:
________
The Treasurer's annual salary shall be $________ (________).
The Secretary may undertake the following actions as part of the Secretary's everyday duties:
________
The Secretary's annual salary shall be $________ (________).
The Board has appointed a Chairman to preside over Board meetings and to act as liaison between the Officers and the Shareholders. The Chairman is: ________.
Shareholders may be employed as Officers, provided they own stock in the Corporation and perform their duties in accordance with the terms and conditions of this Agreement, the Articles of Incorporation, and the Bylaws.
The following actions may not be undertaken by any single Officer acting independently, and shall require the approval of each and every Officer of the Corporation:
________
ARTICLE 3 — CORPORATE LIMITS
§ 3.1 The Corporation shall not undertake any of the following actions without the unanimous written approval of all Shareholders: (a) any merger or consolidation of the Corporation with or into any other entity; (b) any amendment or repeal of the Articles of Incorporation or Bylaws of the Corporation; (c) the issuance of new shares of any class or series; (d) the sale, lease, exchange, or other disposition of all or substantially all of the assets of the Corporation; (e) any amendment of this Agreement; or (f) the voluntary dissolution or winding up of the Corporation.
ARTICLE 4 — CAPITAL FUNDS
§ 4.1 If a simple majority of the Shareholders determine, by special vote, that the Corporation requires additional funds to satisfy creditor obligations or to maintain the corporate business, the Shareholders may decide, by a two-thirds (2/3) majority vote, whether to (a) extend an interest-free loan to the Corporation on a pro rata basis, or (b) authorize the Corporation to issue new shares for purchase by the existing Shareholders on a pro rata basis. No Shareholder shall be obligated to contribute additional capital except as such Shareholder may expressly agree in writing.
ARTICLE 5 — DISTRIBUTIONS
§ 5.1 The Corporation may, but shall not be required to, make distributions to its Shareholders from time to time, in the discretion of the Board and subject to applicable law.
§ 5.2 No distribution shall be made if, after giving effect thereto, the Corporation would be unable to pay its debts as they become due in the usual course of business, or the Corporation's total assets would be less than the sum of its total liabilities, consistent with the applicable provisions of the governing business corporation statute of the State of ________. Prior to any distribution, the Board shall confirm that the net income of the Corporation for the prior fiscal year was positive. "Net income" means the gross income of the Corporation less the Corporation's expenses, determined in accordance with generally accepted accounting principles ("GAAP").
§ 5.3 Distributions may take the form of monetary dividends. The timing and amount of any such dividends shall be determined by the Board.
ARTICLE 6 — TRANSFER OF SHARES
§ 6.1 Shares may be transferred only in accordance with this Article 6.
(a) A Shareholder wishing to sell, transfer, or otherwise dispose of shares (the "Seller") shall first offer such shares to the Corporation. The Seller shall hold such offer open to the Corporation for a period of ________ days. The offer shall be in writing and shall state the name and contact information of the offeror and offeree, the number of shares offered, the price at which the shares are to be sold, the date by which the offer must be accepted, and any additional terms.
(b) If the Corporation declines or fails to accept the offer, the Seller shall then offer the shares to the other Shareholders in proportion to the number of shares already held by them. The Seller shall hold such offer open to the other Shareholders for a period of ________ days. The offer shall be in writing and shall state the name and contact information of the offeror and offeree, the number of shares offered, the price at which the shares are to be sold, the date by which the offer must be accepted, and any additional terms.
§ 6.2 Any offer not expressly accepted within the applicable period shall be deemed declined.
§ 6.3 The Corporation shall have the duty to purchase all shares held by a Shareholder in any of the following circumstances:
(a) the Shareholder was employed by the Corporation in any capacity and such employment relationship has terminated;
(b) the Shareholder has been adjudicated incompetent or has had a guardian or conservator appointed by a court of competent jurisdiction;
(c) the Shareholder commences or becomes the subject of any bankruptcy or insolvency proceeding (including the appointment of a trustee or receiver), makes an assignment for the benefit of creditors, or the shares are subject to a purported transfer without the Shareholder's consent, including by involuntary proceeding; or
(d) the death of the Shareholder.
§ 6.4 In any such circumstance, the Corporation shall purchase all, and not merely a portion, of the affected Shareholder's shares. The Corporation shall effect such purchase by serving written notice upon the Shareholder or the legal representative of the Shareholder or the Shareholder's estate as soon as practicable after the Corporation receives notice of the triggering event. Any transfer made in violation of this Article 6 shall be null and void and of no force or effect.
ARTICLE 7 — VALUATION
§ 7.1 If any duty of the Corporation to purchase shares is triggered, the shares shall be purchased at Fair Market Value as defined herein.
§ 7.2 "Fair Market Value" of the shares shall be a value established by the Shareholders each year at the annual meeting. The Fair Market Value shall be determined by a majority of the Shareholders and communicated to the Officers and Directors in writing within ten (10) business days following the annual meeting.
§ 7.3 If the Shareholders are unable to agree upon a Fair Market Value at any annual meeting, then, upon the triggering of a duty to purchase, any Officer of the Corporation may request a valuation by submitting to the Shareholders a list of two (2) independent financial services or valuation firms. The Shareholders shall select one such firm by vote, and such firm shall determine the Fair Market Value of the shares in accordance with GAAP.
§ 7.4 The Shareholders shall have no right to dispute the Fair Market Value established by such independent firm once set.
ARTICLE 8 — DISPUTE RESOLUTION
§ 8.1 In the event of any dispute among Shareholders, the Shareholders shall first attempt to resolve the dispute in good faith among themselves. If unsuccessful, the Shareholders shall submit the matter to mediation in accordance with the applicable statutory and procedural rules then in effect.
§ 8.2 Any Shareholder may object in writing to the selection of a mediator within fifteen (15) days of such selection, in which case an alternate mediator shall be chosen. If no mediator is agreed upon, any Party may apply to a court of competent jurisdiction for the appointment of a mediator.
§ 8.3 If mediation is unsuccessful, the Shareholders shall submit the matter to binding arbitration administered in accordance with the laws of the State of ________ and the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and any other applicable federal rules and statutes.
§ 8.4 Any Shareholder may object in writing to the selection of an arbitrator within fifteen (15) days of such selection, in which case an alternate arbitrator shall be chosen. If no arbitrator is agreed upon, any Party may apply to a court of competent jurisdiction for the appointment of an arbitrator.
§ 8.5 The arbitrator's decision shall be final and binding, and judgment upon the award rendered may be entered in any court of competent jurisdiction within the State of ________.
ARTICLE 9 — NON-COMPETITION
§ 9.1 Each Shareholder acknowledges and agrees that any business opportunity similar to the business of the Corporation that comes before such Shareholder during the period such Shareholder remains a Shareholder, or is employed by, or serves as a Director or Officer of, the Corporation, shall be the exclusive opportunity and property of the Corporation, and no Shareholder shall usurp any such opportunity.
§ 9.2 Each Shareholder agrees that, during the period such Shareholder remains a Shareholder, or is employed by, or serves as a Director or Officer of, the Corporation, and for a period of one (1) year thereafter, such Shareholder shall not, directly or indirectly, organize, commence, or join any business that competes directly with the business of the Corporation within ________ miles of any office of the Corporation, nor solicit any Shareholder, Officer, Director, employee, customer, or supplier of the Corporation, nor otherwise compete with the Corporation. The Parties acknowledge that the restrictions in this Article 9 are reasonable in scope, geography, and duration; provided, however, that if any such restriction is held by a court of competent jurisdiction to be unenforceable, such restriction shall be reformed to the maximum extent permitted by applicable law.
ARTICLE 10 — CONFIDENTIAL INFORMATION
(a) is known or available to the public at the time of disclosure or becomes so through no fault of any Shareholder;
(b) is already lawfully known to third parties not subject to this Agreement and not employed by the Corporation;
(c) is disclosed by the Corporation to third parties without restriction;
(d) is disclosed to a Shareholder by a third party who lawfully possessed the information and had the right to disclose it; or
(e) is independently developed by a Shareholder who can demonstrate such independent development.
§ 10.2 Nothing in this Agreement shall be construed to prohibit any disclosure protected under 18 U.S.C. § 1833(b), which provides immunity for the confidential disclosure of a trade secret to a government official or attorney solely for the purpose of reporting or investigating a suspected violation of law, or in a court filing made under seal.
ARTICLE 11 — ENDORSEMENT
§ 11.1 The following legend shall be printed on, or otherwise associated with, all share certificates (or uncertificated shares) issued by the Corporation:
The shares represented hereby are subject to a Shareholder Agreement executed by the Corporation and all shareholders, which may restrict the right to transfer such shares. A copy of the full Shareholder Agreement may be obtained from the Board of Directors upon request.
ARTICLE 12 — TERMINATION
§ 12.1 This Agreement shall automatically terminate, and all rights and obligations hereunder shall cease (except for those that expressly survive), upon the occurrence of any of the following:
(a) the dissolution of the Corporation, whether voluntary or involuntary;
(b) the adjudication of the Corporation as bankrupt or any assignment by the Corporation for the benefit of creditors; or
(c) the written agreement of each and every Shareholder.
§ 12.2 The obligations under Article 9 (Non-Competition) and Article 10 (Confidential Information) shall survive any termination of this Agreement in accordance with their terms.
ARTICLE 13 — DISSOLUTION
§ 13.1 The Corporation shall not voluntarily dissolve without the unanimous approval of all Shareholders. Upon dissolution, the Corporation shall commence winding-up procedures and shall cease all business activities except those necessary for winding up its affairs, which may include:
(a) settling the debts of the Corporation, whether by payment or collection;
(b) defending any legal action brought against the Corporation;
(c) assessing and recovering any unlawful distributions;
(d) selling or transferring all or substantially all of the assets of the Corporation; and/or
(e) engaging additional agents or temporary staff necessary to assist in the winding up of affairs.
§ 13.2 Any remaining assets of the Corporation after winding up shall be distributed in the following order of priority, consistent with applicable law: first, to satisfy all debts of the Corporation other than debts owed to Shareholders; second, to satisfy debts owed to Shareholders, subject to any subordination agreements; and thereafter, any remaining funds shall be paid to the Shareholders in respect of the purchase price actually paid for their shares and then any accrued but unpaid dividends.
ARTICLE 14 — AMENDMENT
§ 14.1 No amendment, modification, or supplement to this Agreement shall be valid or binding unless made in writing and signed by all Shareholders of the Corporation.
ARTICLE 15 — NOTICES
§ 15.1 Any notice required or permitted to be given under this Agreement shall be in writing and shall be delivered personally, sent by certified or registered mail with return receipt requested, or sent by a nationally recognized overnight courier service, addressed to the relevant Party at the address set forth at the head of this Agreement, or to such other address as a Party may designate by written notice to the other Parties. Notice shall be deemed effective upon receipt if delivered personally, three (3) business days after mailing if sent by certified or registered mail, or one (1) business day after deposit with an overnight courier service.
ARTICLE 16 — BINDING EFFECT
§ 16.1 This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns. The terms and conditions of this Agreement shall continue to be binding upon any person or entity who acquires shares of the Corporation, whether by purchase, transfer, operation of law, or otherwise, and all such shares shall remain subject to the provisions of this Agreement.
ARTICLE 17 — GENERAL PROVISIONS
(a) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of ________, without regard to its conflict of laws principles, together with any applicable federal law. The Parties consent to the exclusive jurisdiction and venue of the state and federal courts located in ________ for any matter not subject to arbitration under Article 8. The Parties agree that this choice of law, venue, and jurisdiction provision is mandatory, not permissive.
(b) FILING AND CORPORATE RECORDS. This Agreement shall be maintained in the records of the Corporation and, to the extent required by applicable law, shall be filed or noted with the appropriate corporate records and updated from time to time to reflect amendments or the addition of new Shareholders.
(c) THIRD PARTIES. This Agreement shall not confer any rights, remedies, or benefits, express or implied, upon any person or entity other than the Parties hereto.
(d) LANGUAGE. All communications and notices given pursuant to this Agreement shall be in the English language.
(e) ASSIGNMENT. Neither this Agreement nor any rights or obligations hereunder may be assigned, sold, leased, or otherwise transferred, in whole or in part, by any Party except as expressly permitted herein.
(f) NO WAIVER. No term of this Agreement shall be deemed waived by any act or acquiescence of any Party. A waiver shall be effective only if set forth in a writing signed by the waiving Party. No waiver of any term shall constitute a waiver of any other term or of the same term on a future occasion. The failure of any Party to enforce any term of this Agreement shall not constitute a waiver of such term or any other term.
(g) SEVERABILITY. If any provision of this Agreement is held to be invalid or unenforceable, this Agreement shall be deemed amended to the extent necessary to render the offending provision, and the remainder of this Agreement, valid and enforceable. If a court declines to so amend, the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the remaining provisions, which shall be enforced as if the offending provision had not been included.
(h) ENTIRE AGREEMENT. This Agreement, together with the Articles of Incorporation and Bylaws of the Corporation, constitutes the entire agreement among the Parties with respect to its subject matter and supersedes all prior or contemporaneous understandings, whether written or oral. In the event of a conflict between this Agreement and the Bylaws, this Agreement shall control to the extent permitted by applicable law.
(i) HEADINGS. The headings in this Agreement are for convenience only and shall not affect the construction or interpretation of any provision.
(j) COUNTERPARTS; ELECTRONIC SIGNATURES. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered electronically or by facsimile shall be deemed valid and binding, consistent with the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) and applicable state law. If the dates of signature differ, this Agreement shall be effective as of the date on which the last Party executes it.
EXECUTION BY SHAREHOLDERS
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
________
Signature:
_____________________________
Date:
_____________________________
________
Signature:
_____________________________
Date:
_____________________________
ACKNOWLEDGED AND AGREED, on behalf of the Corporation:
________
By: _____________________________
Name: ________
Title: ________
Date: _____________________________
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