Nebraska Shareholders' Agreement between Two Shareholders of Closely Held Corporation with Buy Sell Provisions

• Category: Corporations - Shareholders and Stock
• State: Multi-State
• Control #: US-02569BG
• Format: Word; Rich Text

Description

A corporation whose shares are held by a single shareholder or a closely-knit group of shareholders (such as a family) is known as a close corporation. The shares of stock are not traded publicly. Many of these types of corporations are small firms that in the past would have been operated as a sole proprietorship or partnership, but have been incorporated in order to obtain the advantages of limited liability or a tax benefit or both.

A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights. This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.

A Nebraska Shareholders' Agreement is a legal document that outlines the rights, obligations, and responsibilities of two shareholders (or more) in a closely held corporation. This agreement establishes a framework for how the shareholders will manage the corporation and resolve disputes, providing clarity and protection for all parties involved. One specific type of Nebraska Shareholders' Agreement is the agreement that includes buy-sell provisions. Buy-sell provisions are crucial in cases where one shareholder wants to sell their shares, or if a shareholder passes away, becomes disabled, or wishes to exit the corporation for any other reason. These provisions establish a mechanism for the remaining shareholder(s) to buy the shares from the departing shareholder, ensuring a smooth transition and preventing unwanted third-party involvement. Some common types of Nebraska Shareholders' Agreement with buy-sell provisions include: 1. Cross-Purchase Agreement: In this type of agreement, the remaining shareholder(s) have the option to purchase the exiting shareholder's shares individually, based on a pre-determined valuation method. 2. Stock Redemption Agreement: Unlike the cross-purchase agreement, this type allows the corporation itself to redeem the exiting shareholder's shares. The corporation then becomes the owner of those shares, effectively reducing the number of outstanding shares. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase agreement and stock redemption agreement. It can be designed to provide flexibility in determining the buyout process, allowing either the remaining shareholder(s) or the corporation itself to acquire the exiting shareholder's shares. These agreements typically include detailed provisions regarding the valuation of shares, payment terms, timing, and any restrictions on selling shares to third parties. They may also address issues such as non-competition clauses, board representation, and dispute resolution mechanisms. When drafting a Nebraska Shareholders' Agreement with buy-sell provisions, it is essential to consult with legal professionals who specialize in corporate law and have expertise in Nebraska jurisdiction. This ensures that the agreement complies with all relevant laws and is tailored to the specific needs and objectives of the shareholders and the corporation. Overall, a carefully crafted Nebraska Shareholders' Agreement with buy-sell provisions protects the interests of the shareholders, facilitates a smooth transfer of ownership, and establishes a framework for efficient and effective corporate governance.