xx[professional CORPORATION]xx MANAGEMENT CLOSE CORPORATION AGREEMENT

Transcription

1 xx[professional CORPORATION]xx MANAGEMENT CLOSE CORPORATION AGREEMENT This Close Corporation Agreement (the "Agreement"), made at xx[city]xx, xx[state]xx, effective as of this day of, 20, by and among xx[professional CORPORATION]xx, an xx[state]xx corporation, which with its successors and assigns is herein called "Corporation", and xx[existing SHAREHOLDER]xx and xx[new SHAREHOLDER]xx, who with their respective heirs, executors, administrators and assigns are herein collectively called "Shareholders" and singly designated by their individual, personal names, is to EVIDENCE THAT: WHEREAS Shareholders own all the issued and outstanding shares of Corporation; and WHEREAS xx[existing Shareholder]xx presently owns fifty percent (50%) of Corporation's issued and outstanding capital shares and xx[new Shareholder]xx owns fifty percent (50%) of Corporation's issued and outstanding capital shares; and WHEREAS Corporation and Shareholders intend that this Agreement qualify as a close corporation agreement and is to be governed by xx[section of the Ohio Revised Code]xx; NOW, THEREFORE, in consideration for the mutual promises made herein, Corporation and Shareholders (herein collectively called the "Parties" and individually called a "Party") agree as follows: 1. Agreement Term. 1.1 The term of this Agreement (herein called the "Agreement Term") shall commence on the date hereof and shall continue until terminated as provided herein. 1.2 The Agreement Term shall immediately and automatically terminate upon the death of the last surviving Shareholder. 1.3 The Agreement Term may be terminated by the vote or written consent of the holders of four-fifths of each class of Corporation's outstanding shares. 1.4 The Agreement Term shall immediately and automatically terminate upon the dissolution of Corporation under xx[state]xx law. 2. Close Corporation Agreement. 2.1 This Agreement is intended to qualify as a close corporation agreement under Section xx[ of the Ohio Revised Code]xx and shall be governed by such Section. 2.2 Upon execution of this Agreement, Shareholders shall return to Corporation all Certificates evidencing Shareholders' issued and outstanding shares of Corporation which shall thereupon be imprinted with the following legend: "The shares evidenced by this Certificate are subject to the terms and conditions of a certain Close Corporation Agreement, dated, 20, by and among the Corporation and its Shareholders, a copy of which has been entered in the record of minutes of the proceedings of the Corporation's Shareholders. Any transferee or purported transferee of the shares evidenced hereby shall be bound by and a party to the Close Corporation Agreement. The BOT \ doc\wpp/acs - 1 -

2 Corporation will mail to any Shareholder a copy of the Close Corporation Agreement without charge within five (5) days after receipt of written request therefor." 2.3 Each Shareholder hereby agrees that, if such Shareholder ever transfers any share(s) of Corporation evidenced by a Certificate which does not bear the legend designated in Section 2.2 above, the Shareholder shall notify in writing the transferee that this Agreement exists and shall deliver a copy thereof to the transferee at the time of said transfer. Each Shareholder hereby indemnifies Corporation and all other Shareholders from all damages, losses, costs, and expenses incurred or suffered by Corporation and/or by any other Shareholder(s) directly or indirectly as a result of said Shareholder's breach of or failure to perform this Section Definitions. For purposes of this Agreement, the following terms shall have the meanings designated below: "Party" herein means Corporation, Shareholders and any other person or entity who becomes a party to this Agreement by signing an amendment hereto or is deemed to be a party to this Agreement under Section xx[ of the Ohio Revised Code]xx. "Most Senior Executive Manager" means xx[existing Shareholder]xx, as long as such individual owns at least one (1) of Corporation's issued and outstanding common shares. "Second Most Senior Executive Manager" means xx[new Shareholder]xx, as long as such individual owns at least one (1) of Corporation's issued and outstanding common shares. "Third Most Senior Executive Manager means any person so designated by the Most Senior Executive Manager and listed on Schedule A, attached hereto and incorporated herein by reference, as long as said individual owns at least one (1) of Corporation's issued and outstanding common shares. 4. Authority of Most Senior Executive Manager. 4.1 During the Agreement Term and notwithstanding Corporation's Regulations or any other document, management and final determination of any and all aspects of Corporation's internal affairs and the relations of the Shareholders among themselves are hereby vested in and delegated to the Most Senior Executive Manager, including (but not limited to) the final and exclusive power and authority to: Regulate and govern the management of Corporation's business and other affairs; and Exercise any and all functions of the Board of Directors and/or the Officers of Corporation (except as described in Section 4.1, below), irrespective of whether a Board of Directors and Officers have been appointed or elected; and Except as provided in a written employment agreement, establish and/or periodically change the terms and conditions of employment of any employee of Corporation (without regard to the period of such employment), including the basic compensation, bonuses, and fringe benefits, hours of work, duties and responsibilities or termination of employment of such employee; and BOT \ doc\wpp/acs - 2 -

3 (e) (f) (g) (h) (i) (j) (k) (l) Establish, alter, change, discontinue and/or terminate Corporation's fringe benefit plans or programs, including (but not limited to) Corporation's safe harbor 401(k) profit-sharing, any defined benefit or other retirement plan; and Establish and/or periodically change Corporation's contribution rate to its safe harbor 401(k) profit-sharing, any defined benefit or other retirement plan and Corporation's contributions to and costs of its other fringe benefit plans and programs; and On Corporation's behalf, purchase or otherwise acquire, invest in, hold, encumber, sell, exchange, transfer, dispose of and/or lease (as lessee or lessor) any personal property for the operation, contraction and/or expansion of Corporation; and On Corporation's behalf, make all contracts (including, but not limited to, with persons and entities related to or affiliated with the Most Senior Executive Manager) and compromise, settle, satisfy, adjust and/or discharge any claims, demands, liabilities, debts, obligations, or lawsuits by or against Corporation; and On Corporation's behalf, borrow money and issue, sell and pledge Corporation's notes, bonds and other evidences of indebtedness and secure any of Corporation's obligations by mortgage, pledge or deed of trust of any or all of Corporation's property and guaranty or secure obligations of any person or entity; and Invest Corporation's funds in any deposits, shares, securities or other assets; and Upon such terms and conditions as the Most Senior Executive Manager determines, issue additional shares of Corporation and cause Corporation to redeem any outstanding shares of Corporation; and Perform any duty or obligation of any Director, Officer or any employee of Corporation; and Execute, acknowledge and/or certify any document(s) or instrument(s) of Corporation in one or multiple capacities. 4.2 Notwithstanding the foregoing under Section 4.1 herein, the following items shall require the unanimous consent of all Shareholders: Any change to the terms, conditions and compensation of any written employment agreement between Corporation and any of its Shareholderemployees; provided, however, that the Parties acknowledge and agree that Corporation maintains a discretionary termination provision under Section 8.1 of a certain Employment Agreement, of even date, between Corporation and xx[new Shareholder]xx and the Parties further acknowledge and agree that such Section 9.1 may be invoked by the Most Senior Executive Manager at any time; Any change to the terms, conditions and compensation to the employment by Corporation of xx[existing Shareholder's]xx spouse; BOT \ doc\wpp/acs - 3 -

4 (e) (f) (g) (h) Any change of or increase in rent to Corporation's lease for the premises of Corporation's dental practice, except as described in any written lease between Corporation and the landlord for such premises; The hiring of any additional dentist; The relocation of Corporation's dental practice; Cause Corporation to merge with or into or to consolidate or otherwise combine with any other corporation or business or practice; to acquire all or substantially all the assets of any other corporation, business or practice; and/or to sell all or substantially all Corporation's assets to any other corporation, business or practice; and Dissolve, liquidate and wind-up affairs and business activities of Corporation; and Declare and pay any dividends. 4.3 The failure by the Most Senior Executive Manager to execute any or all of the aforementioned authority or powers or the delegation of such authority or powers shall not be deemed a waiver or relinquishment thereof. 4.4 Except as otherwise provided in Section 7 of this Agreement, all Parties expressly intend that, during the Agreement Term, solely the Most Senior Executive Manager shall exercise the authority and powers designated in Section 4.1 and that neither Corporation's Board of Directors, nor any Officer of Corporation, nor any other person shall exercise such authority or powers, unless (and only for so long as) the Most Senior Executive Manager so requests. 4.5 All Parties further intend and agree that, during the Agreement Term, the Most Senior Executive Manager shall also have the power and authority to veto and overrule any action by the Shareholders and/or any action by the Board of Directors and/or any action of any Officer regarding any matter designated in Subsections through and including (l) of Section 4.1, above. 4.6 Notwithstanding any other contrary provision herein, including Section 4.1(h) of this Agreement, in the event that Corporation desires to expand its dental practice or purchase or replace any dental or other capital equipment, the Parties acknowledge and agree that Corporation shall borrow the funds for such expansion, purchase or replacement from either the Most Senior Executive Manager or a commercial lending institution with terms, interest, and a repayment period suitable to the Most Senior Executive Manager, unless otherwise agreed to by the Parties. 5. Designation of Board of Directors. The following individuals hereby constitute Corporation's Board of Directors: xx[existing Shareholder]xx xx[new Shareholder]xx 6. Designation of Officers of Corporation. The following individuals are hereby designated as the Officers of Corporation: President/Treasurer - xx[existing Shareholder]xx Vice-President/Secretary - xx[new Shareholder]xx BOT \ doc\wpp/acs - 4 -

5 7. Succession of Powers and Authority. Notwithstanding any contrary provision herein, upon the death of the Most Senior Executive Manager or if the Most Senior Executive Manager ceases to own at least one (1) of Corporation's issued and outstanding common shares, all powers and authorities granted to the Most Senior Executive Manager shall immediately and automatically pass to and vest in the Second Most Senior Executive Manager. If the Second Most Senior Executive Manager dies or ceases to own at least one (1) of Corporation's issued and outstanding common shares, all powers and authorities granted to the Second Most Senior Executive Manager shall immediately and automatically pass to and vest in the Third Most Senior Executive Manager. 8. Miscellaneous. 8.1 Except as otherwise expressly stated herein, this Agreement constitutes the entire agreement and understanding between the Parties regarding the subject matter hereof and all other prior or contemporaneous written or verbal understandings, commitments, statements, negotiations, representations, arrangements and/or agreements (regarding the subject matter hereof) are hereby merged into and superseded by this Agreement. The Parties acknowledge that there are no oral or other written understandings, arrangements, commitments and/or agreements between the Parties relating to the subject matter of this Agreement. This Agreement supersedes and nullifies any contrary provisions in Corporation's Regulations, bylaws or other governing documents. 8.2 All provisions of this Agreement are severable and neither this Agreement nor any provision hereof shall be affected by the invalidity or unenforceability of any other provision of this Agreement. 8.3 No course of action by any Party and no refusal or neglect of any Party to exercise any right hereunder or to enforce compliance with the terms of this Agreement shall constitute a waiver of any provision herein, unless such waiver is expressed in a written document which is signed by the waiving Party and which is clearly designated as a waiver of a specific provision(s) of this Agreement. 8.4 This Agreement may be amended, altered or otherwise changed by the affirmative vote or written consent of all the Shareholders and specifically designated as an amendment to this particular Agreement. 8.5 For purposes of this Agreement, the singular includes the plural and vice-versa and the feminine, masculine and neuter include each other. 8.6 When a Shareholder (as defined in this Agreement) ceases to own any common shares of Corporation for any reason, such Shareholder shall thereupon immediately and automatically (without notice, demand or any other further action) cease being a Party to this Agreement and shall no longer be defined as a "Shareholder" herein. 8.7 All Parties agree to sign, execute and deliver such other instruments and to take all other actions necessary or required by the Most Senior Executive Manager to effect the provisions, purposes and intentions of this Agreement. 8.8 All Parties acknowledge and agree that monetary damages would be impossible to ascertain in the event of a breach of this Agreement and that, therefore, each provision of this Agreement shall be enforceable by injunction, specific performance or other equitable relief, irrespective of whether an adequate remedy at law exists. 8.9 This Agreement shall inure to the benefit of and be binding upon the respective heirs, executors, administrators, personal representatives, successors and assigns of the Parties. BOT \ doc\wpp/acs - 5 -