Shareholders Agreement of Top Line Ventures Group, Inc.
SHAREHOLDERS AGREEMENT
OF
TOP LINE VENTURES GROUP, INC.
Shareholders Agreement of Top Line Ventures Group, Inc.
TABLE OF CONTENTS
Section 1 - General Provisions
Defined Terms
Section 2 - General Restrictions
General Restrictions
Section 3 - Involuntary Transfers
Option to Purchase
Selling Shareholder
Purchase Price
Closing
Payment for the Transferred Shares
No Election to Purchase
Section 4 - Termination of Employment
Option to Purchase
Term and Exercise of the Option
Purchase Price
Closing
Payment for the Transferred Shares
No Election to Purchase
Section 5 - Death of Horace Martin or Carol Martin
Option to Sell.
Purchase Price
Closing
Purchase Price in Excess of Insurance.
Failure to Elect to Sell
Shareholder Wills
Section 6 - Death of Other Shareholders
Purchase by Corporation
Purchase Price
Closing.
Purchase Price in Excess of Insurance.
Shareholder Wills.
Section 7 - Life Insurance
Purchase of Life Insurance
Insurance Proceeds
Transfer of Insurance
Excess Proceeds
Section 8 - Disability of a Shareholder
Purchase by Corporation
Purchase Price
Closing
Value in Excess of Insurance
Section 9 - Disability Insurance
Right to Purchase Disability Insurance
Insurance Proceeds
Transfer of Insurance
Excess Proceeds
Section 10 - Offer to Purchase Shares; Right of First Refusal
Offer to Purchase Shares; Right of First Refusal.
Proposed Sale Notice
Exercise of the Right
Closing by Remaining Shareholder
Failure to Elect; Purchase by Outside Offeror
Closing by Outside Offeror
Failure to Consummate Sale to Outside Offeror
Section 11 - Transfer to Family Members
Transfers by and to Horace Martin and Carol Martin
Section 12 - Value of the Transferred Shares
Corporation Value
Scheduled Value
Failure to Agree on Scheduled Value
Appraised Value
Purchase Price
Section 13 - Closing Procedures
Closing
Section 14 - Restriction on Stock Certificate
Restriction on Stock Certificate
Section 15 - Right of Set Off
Corporate Right of Set Off
Section 16 - Personal Guarantees; Indemnification
Personal Guarantees
Agreement to Indemnify
Default in Payment of Indemnity
Right of Set Off
Security for Deferred Stock Purchases
Section 17 - Company Management
Issuance of Additional Stock
Reductions of Shareholder Compensation
Termination of a Shareholder
Composition of the Board of Directors
Access to Books and Records
Section 18 - Restrictive Covenants
Agreement to Restrictions
Nonsolicitation of Employees
Covenant Not to Compete
Nonsolicitation of Customers
Proprietary Information
Injunctive Relief
Scope
Section 19 - Miscellaneous
Dispute Resolution
Benefit
Construction
Waiver
Severability
Notices
Number and Gender
Headings Not Part of Agreement
Amendment; Termination
Effectuation of Agreement
Incorporation of Exhibits
Entire Agreement
Exhibit 1 - Defined Terms
Exhibit 2 - Schedule of Shareholders
Exhibit 3 - Insurance Policies
Exhibit 4 - Scheduled Value
SHAREHOLDERS AGREEMENT
OF
TOP LINE VENTURES GROUP, INC.
THIS SHAREHOLDERS AGREEMENT OF TOP LINE VENTURES GROUP, INC. is made as of the ____ day of ______, 1998, by and among Horace Graziani, Carol Graziani, Jane Neal, Peter S. Joyner, Kevin L. Brown, Marilyn Samson and Top Line Ventures Group, Inc., a corporation organized and existing under the laws of the State of Maryland.
WHEREAS, the Shareholders own all of the issued and outstanding shares of stock, with each Shareholder owning the number and type of shares of Stock listed next to his name on Exhibit 2 attached hereto; and
WHEREAS, the Shareholders have agreed to certain restrictions and obligations relative to the Stock owned by them and to the operation of the Corporation; and
WHEREAS, to give force and effect to such agreements, the parties desire to set forth such restrictions and obligations in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the agreements set forth below, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1Section 1 - General Provisions
1.1Defined Terms. Certain of the capitalized terms used in this Agreement shall have the meanings set forth in Exhibit 1 attached hereto and incorporated herein. Other capitalized terms may be defined elsewhere in the text of this Agreement, and shall have the meanings so ascribed to them for all purposes of this Agreement.
2Section 2 - General Restrictions
2.1General Restrictions. Each of the Shareholders hereby agrees that he will not Transfer all or any part of his shares of Stock, nor shall any shares of Stock be Transferable on the stock transfer books of the Corporation, except as permitted by, and in accordance with, the following provisions of this Agreement:
Section 3 - Involuntary Transfers
Section 4 - Termination of Employment
Section 5 - Death of Horace Graziani or Carol Graziani
Section 6 - Death of Other Shareholders
Section 8 - Disability of a Shareholder
Shareholders Agreement of Top Line Ventures Group, Inc.
Section 10 - Offer to Purchase Shares; Right of First Refusal
Section 11 - Transfer to Family Members
The pledge or encumbrance of any shares of Stock shall not be permitted under any circumstance. Any attempted or purported Transfer of Stock not in strict compliance with the provisions of this Agreement shall be void and of no force and effect.
3Section 3 - Involuntary Transfers
3.1Option to Purchase. If an Involuntary Transfer occurs, the Corporation shall have the right and option to purchase all of the Selling Shareholder’s (as defined below) Stock. Such right and option shall be exercised by the Corporation, within ninety (90) days of the Involuntary Transfer by providing to the Selling Shareholder or his representative written notice of the election to purchase such Stock. Upon receipt of the written notice of election to purchase such Stock, the Selling Shareholder or his representative shall be obligated to sell, upon the terms and conditions in this Section 3, the Stock subject to the election.
3.2Selling Shareholder. For the purposes of this Section 3, a “Selling Shareholder” shall include any Person who may receive shares of Stock pursuant to an Involuntary Transfer.
3.3Purchase Price. The Purchase Price to be paid by the Corporation for shares of Stock subject to this Section 3 shall be determined by the valuation provisions of Section 13 of this Agreement.
3.4Closing. Closing on the purchase of shares of Stock subject to this Section 3 shall be pursuant to the closing provisions of Section 13 of this Agreement.
3.5Payment for the Transferred Shares. The Corporation shall pay the Purchase Price on a deferred basis in equal monthly payments over a four (4) year period. Interest on the deferred value shall be at the Prime Rate and shall be adjusted on each anniversary of the Closing.
1
Shareholders Agreement of Top Line Ventures Group, Inc.
3.6No Election to Purchase. If the Corporation does not elect to purchase any of the Selling Shareholder’s Stock, or if the Corporation fails to close on the Transfer of Stock, then the Selling Shareholder or his representative shall become a Shareholder subject to the terms of the Involuntary Transfer, and shall be required, to the extent permitted by law, to become a party to this Agreement and the provisions of this Agreement shall be fully binding upon any and all Persons who have received shares of such Stock due to the Involuntary Transfer.
4Section 4 - Termination of Employment
4.1Option to Purchase. If the Corporation’s employment of a Shareholder is terminated for any reason other than the death or disability of such Shareholder, the Corporation shall have the right and option to purchase all of the shares of Stock of such Terminated Employee
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