Shareholder Agreement - Kansas

SHAREHOLDER AGREEMENT — [CORPORATION NAME], a Kansas corporation

TABLE OF CONTENTS

1. Definitions
2. Purpose & Statutory Authorization
3. Transfer Restrictions
4. Buy-Sell (Triggering Events; Mandatory and Optional Purchase)
5. Valuation & Payment Terms
6. Voting Agreement; Board; Officers
7. Drag-Along & Tag-Along Rights
8. Preemptive Rights
9. Protective Provisions / Supermajority
10. Information Rights
11. Restrictive Covenants
12. Deadlock Resolution
13. Certificate Legend
14. Term & Termination
15. Dispute Resolution & Governing Law
16. General Provisions
17. Signatures
18. Sources & References

RECITALS AND PARTIES

THIS SHAREHOLDER AGREEMENT (this "Agreement") is made and entered into as of [__/__/____] (the "Effective Date") by and among [CORPORATION NAME], a Kansas corporation (the "Corporation"), and the persons listed on the Share Schedule below and who execute this Agreement (each, a "Stockholder" and, collectively, the "Stockholders").

RECITALS

A. The Corporation is a corporation organized and existing under the Kansas General Corporation Code, K.S.A. § 17-6001 et seq. (the "Code"), having its registered office in [COUNTY] County, Kansas.

B. The Corporation [is / is not] a "close corporation" that has made (or will make) the election described in K.S.A. § 17-7202 and § 17-7204.

C. As of the Effective Date, the authorized capital of the Corporation consists of [____] shares of [CLASS/SERIES] stock, par value [$____] per share (or no par value), of which [____] shares are issued and outstanding and held of record by the Stockholders as set forth in the Share Schedule.

D. The Corporation is a closely-held corporation whose stock is not publicly traded. The Stockholders desire to provide for the management, ownership, and continuity of the Corporation; to restrict the transfer of its stock; to provide an orderly mechanism for the purchase and sale of stock upon certain events; to coordinate the voting of their stock and the composition of the Board; and to otherwise set forth their respective rights and obligations.

E. The Stockholders intend that this Agreement be enforceable to the fullest extent permitted by Kansas law, including the transfer-restriction provisions of K.S.A. § 17-6426 and the stockholder-voting-agreement provisions of K.S.A. § 17-6508(c).

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows.

Share Schedule (Ownership as of the Effective Date)

1. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below. Other terms are defined where they first appear.

"Affiliate" means, as to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.

"Agreed Value" has the meaning set forth in Section 5.1.

"Board" means the board of directors of the Corporation (or, if the Corporation has made a close-corporation election and adopted a § 17-7211 management provision, the Stockholders acting as the governing body).

"Business Day" means any day other than a Saturday, Sunday, or legal holiday in the State of Kansas.

"Close-Corporation Election" means an election by the Corporation to be a close corporation under K.S.A. § 17-7201 through 17-7216 by including the required provisions in its articles of incorporation under § 17-7202 and § 17-7204.

"Code" means the Kansas General Corporation Code, K.S.A. § 17-6001 et seq., including the close-corporation provisions of K.S.A. § 17-7201 et seq., as amended.

"Disability" means a Stockholder's inability, by reason of physical or mental illness or injury, to perform substantially all of the duties such Stockholder customarily performs for the Corporation for a continuous period of [____] days or for [____] days in any [twelve (12)]-month period, as determined in accordance with Section 4.2(b).

"Fair Market Value" has the meaning set forth in Section 5.2.

"Immediate Family" means a Stockholder's spouse, children (natural or adopted), grandchildren, parents, and siblings, and a trust established solely for the benefit of any of them or the Stockholder.

"Permitted Transferee" has the meaning set forth in Section 3.3.

"Person" means an individual, corporation, partnership, limited liability company, trust, estate, association, or other entity.

"Purchase Price" means the price determined under Section 5 for stock purchased under this Agreement.

"Stock" or "Shares" means all shares of capital stock of the Corporation now owned or hereafter acquired by a Stockholder, and any securities convertible into or exercisable for such shares, as contemplated by K.S.A. § 17-6426.

"Transfer" means any sale, assignment, gift, pledge, hypothecation, encumbrance, or other disposition of Stock or any interest therein, whether voluntary or involuntary, by operation of law or otherwise.

"Triggering Event" has the meaning set forth in Section 4.1.

2. PURPOSE & STATUTORY AUTHORIZATION

2.1 Purpose

The purpose of this Agreement is to promote the Stockholders' mutual interests and the interests of the Corporation by imposing certain restrictions and obligations on the Stockholders and the Stock, and by providing for the continuity, governance, and orderly transfer of ownership of a closely-held Kansas corporation.

2.2 Statutory Basis

This Agreement is entered into under and is intended to be enforceable pursuant to Kansas law, including:

(a) Close-corporation governance. If the Corporation has made a Close-Corporation Election, K.S.A. § 17-7201 provides that the close-corporation provisions (§§ 17-7201 through 17-7216) apply, and the balance of the Code applies except as those provisions otherwise provide. In particular, K.S.A. § 17-7211 permits the articles of incorporation to provide that the business of the Corporation be managed by the Stockholders rather than by a board of directors; while such a provision is in effect, the Stockholders are deemed directors for purposes of the Code and assume the liabilities of directors, and (unless the articles or a stockholder agreement provide otherwise) action is taken by voting of shares under K.S.A. § 17-6502(a). The existence of a § 17-7211 management provision must be noted conspicuously on each stock certificate (or in the § 17-6401(f) notice for uncertificated shares).

(b) Transfer restrictions. K.S.A. § 17-6426 authorizes a written restriction on the transfer or registration of transfer of securities (or on the amount of securities that may be owned) to be imposed by the articles of incorporation, the bylaws, or by an agreement among security holders or among such holders and the corporation. Such a restriction is enforceable against a holder, successor, or transferee if it is permitted by the statute and noted conspicuously on the certificate (or contained in the § 17-6401(f) notice); otherwise it is ineffective except against a person with actual knowledge of it. The right-of-first-refusal, buy-sell, consent, and mandatory-sale mechanics in this Agreement are expressly permitted forms under § 17-6426(c)(1)–(4), and restrictions to preserve Subchapter S status, tax attributes, or regulatory advantages are conclusively presumed reasonable under § 17-6426(d).

(c) Stockholder voting agreements. K.S.A. § 17-6508(c) provides that an agreement between two or more stockholders, in writing and signed by the parties, may provide that in exercising any voting rights the shares held by them shall be voted as provided by the agreement, as the parties may agree, or as determined under an agreed procedure. The voting provisions of Section 6 constitute such a stockholder voting agreement.

(d) Voting trusts. To the extent the Stockholders elect to implement a voting trust, K.S.A. § 17-6508(a) governs (including the requirement to deliver a copy of the trust agreement to the Corporation's registered office or principal place of business) and is incorporated by reference.

2.3 Coordination with Charter Documents

To the extent any provision of this Agreement restricts the discretion or powers of the Board, governs distributions, or otherwise departs from the default governance rules of the Code, the Stockholders agree to cause corresponding provisions to be adopted in the Articles of Incorporation (including, if applicable, a Close-Corporation Election and a § 17-7211 management provision) and/or Bylaws and to be approved by all stockholders, and to take all action necessary to give such provisions effect. In the event of a conflict between this Agreement and the Bylaws, the Stockholders shall, as among themselves, be bound by this Agreement and shall vote to conform the Bylaws to this Agreement.

3. TRANSFER RESTRICTIONS

3.1 General Prohibition

No Stockholder shall Transfer all or any portion of such Stockholder's Stock except in strict compliance with this Agreement and applicable law. Any purported Transfer in violation of this Agreement shall be void ab initio, shall not be recognized on the books of the Corporation, and shall confer no rights upon the purported transferee.

3.2 Right of First Refusal

(a) Offer Notice. A Stockholder who receives a bona fide written offer from a third party to purchase any of such Stockholder's Stock and who desires to accept it (the "Selling Stockholder") shall first deliver written notice (the "Offer Notice") to the Corporation and the other Stockholders. The Offer Notice shall identify the prospective transferee, the number of shares offered (the "Offered Shares"), the price, and all material terms.

(b) Corporation's Option. The Corporation shall have [thirty (30)] days after receipt of the Offer Notice to elect, by written notice, to purchase all or any portion of the Offered Shares on the same terms set forth in the Offer Notice.

(c) Stockholders' Option. To the extent the Corporation does not elect to purchase all of the Offered Shares, the other Stockholders shall have an additional [thirty (30)] days to elect to purchase the remaining Offered Shares, pro rata in proportion to their respective holdings (with rights of over-allotment among electing Stockholders).

(d) Sale to Third Party. If the Corporation and the Stockholders do not collectively elect to purchase all of the Offered Shares within the option periods, the Selling Stockholder may, within [sixty (60)] days thereafter, Transfer the Offered Shares to the identified third party at a price not less than, and on terms no more favorable to the transferee than, those in the Offer Notice, provided the transferee first executes a joinder agreeing to be bound by this Agreement. Any shares not so transferred again become subject to this Agreement.

3.3 Permitted Transfers

The right of first refusal in Section 3.2 shall not apply to, and a Stockholder may make, the following Transfers (each, a "Permitted Transfer"; each transferee, a "Permitted Transferee"), provided the transferee executes a joinder agreeing to be bound by this Agreement and the Stock remains subject hereto:

(a) a Transfer to the Corporation or to another Stockholder;

(b) a Transfer to a member of the Stockholder's Immediate Family or to a trust or entity wholly owned for estate-planning purposes, provided the transferring Stockholder retains voting control of the Stock during such Stockholder's lifetime;

(c) a Transfer upon death by will or intestacy, subject to Section 4; and

(d) any Transfer approved in writing by Stockholders holding at least [____]% of the outstanding Stock.

3.4 Prohibited Transfers

No Stockholder shall pledge, hypothecate, or grant a security interest in any Stock, or Transfer any Stock to a competitor of the Corporation, without the prior written consent of Stockholders holding at least [____]% of the outstanding Stock. If the Corporation has made a Close-Corporation Election, no Transfer shall be permitted that would cause the number of holders of record to exceed the maximum specified in the articles under K.S.A. § 17-7202, and any such Transfer is subject to K.S.A. § 17-7205 through 17-7207.

4. BUY-SELL: TRIGGERING EVENTS

4.1 Triggering Events

The occurrence of any of the following with respect to a Stockholder (a "Triggering Event"; such Stockholder, the "Affected Stockholder" or such Stockholder's estate or representative) gives rise to the purchase rights and obligations in this Section 4:

(a) Death of a Stockholder who is an individual;

(b) Disability of a Stockholder who is an individual;

(c) Termination of Employment of a Stockholder who is employed by the Corporation, whether voluntary or involuntary, with or without cause;

(d) Bankruptcy or Insolvency of a Stockholder, including the filing of a voluntary or involuntary petition, an assignment for the benefit of creditors, or the appointment of a receiver;

(e) Divorce of a Stockholder, to the extent any Stock (or marital interest therein) would be awarded to a non-Stockholder spouse;

(f) Involuntary Transfer by operation of law, levy, or attachment; and

(g) Voluntary Withdrawal by a Stockholder who delivers a written notice of intent to withdraw and sell.

4.2 Mandatory and Optional Purchase

(a) Death. Upon the death of a Stockholder, the Corporation [shall (mandatory) / may (optional)] purchase, and the deceased Stockholder's estate shall sell, all of the deceased Stockholder's Stock at the Purchase Price determined under Section 5. To the extent the Corporation does not purchase all such Stock, the surviving Stockholders [shall / may] purchase the balance pro rata.

(b) Disability. Disability shall be determined by a licensed physician selected by the Corporation (or, if the Affected Stockholder disputes the determination, by a third physician jointly selected by the Corporation's and the Stockholder's physicians). Upon a determination of Disability, the purchase mechanics in Section 4.2(a) apply.

(c) Termination of Employment. Upon Termination of Employment of a Stockholder, the Corporation and the other Stockholders shall have the option (and, if the parties so elect by completing the bracketed term, the obligation) to purchase the terminated Stockholder's Stock. The parties shall complete: purchase is [mandatory / optional]; in the case of termination [for cause], the Purchase Price shall be [Fair Market Value / __% of Fair Market Value / Agreed Value].

(d) Bankruptcy, Divorce, Involuntary Transfer, Voluntary Withdrawal. Upon any such Triggering Event, the Corporation (first) and the other Stockholders (second) shall have the option to purchase all of the Affected Stockholder's Stock (or the Stock subject to the involuntary transfer or divorce award) at the Purchase Price determined under Section 5. A non-Stockholder spouse or transferee is bound only to the extent applicable law and an enforceable joinder or restriction so provide. Under 11 U.S.C. § 541(c)(1), nothing in this Agreement excludes the ownership interest from a bankruptcy estate, binds a bankruptcy trustee beyond applicable law, or limits a trustee's statutory powers.

4.3 Closing

The closing of any purchase under this Section shall occur within [sixty (60)] days after the later of the Triggering Event or the final determination of the Purchase Price, at the Corporation's principal office. At closing, the seller shall deliver the certificates (or transfer instructions for uncertificated shares) duly endorsed, free of liens, and the buyer shall deliver the consideration in accordance with Section 5.3.

5. VALUATION & PAYMENT TERMS

5.1 Agreed Value

The Stockholders [may] establish an agreed value per share (the "Agreed Value") by executing a Certificate of Agreed Value attached as Exhibit A, to be reviewed and updated at least annually. If a Certificate of Agreed Value has been executed within [twenty-four (24)] months before a Triggering Event, the Agreed Value shall be the Purchase Price.

5.2 Formula / Appraisal (Fair Market Value)

If no current Agreed Value exists, the Purchase Price shall be the "Fair Market Value" of the Stock, determined as follows (the parties shall select one method):

(a) Formula. [Describe formula — e.g., [____] times trailing twelve-month EBITDA, less indebtedness, multiplied by the selling percentage]; or

(b) Appraisal. Fair Market Value shall be determined by an independent appraiser. The Corporation and the seller shall each select one qualified appraiser within [fifteen (15)] days; if the two appraisals are within [ten percent (10%)] of each other, the Fair Market Value is their average; otherwise, the two appraisers shall select a third, whose determination (within the range of the first two) is binding. The appraisal shall [apply / not apply] minority and marketability discounts.

5.3 Payment Terms

(a) Cash / Insurance Proceeds. At closing, the buyer shall pay [____]% of the Purchase Price in cash, including any life-insurance proceeds applied under Section 5.4.

(b) Promissory Note. The balance shall be evidenced by a promissory note payable in [____] equal [monthly / quarterly / annual] installments over [____] years, bearing interest at [the applicable federal rate / ____% per annum], secured by a pledge of the purchased Stock, with the right to prepay without penalty.

5.4 Life-Insurance Funding

(a) The Corporation [and/or the Stockholders] may purchase and maintain life-insurance policies on the lives of the Stockholders to fund the purchase obligations on death. The Corporation shall be the [owner and beneficiary] of such policies.

(b) The policies and beneficiaries are listed on Exhibit B. Upon a Stockholder's death, the proceeds shall be applied first to the Purchase Price for that Stockholder's Stock. Proceeds exceeding the Purchase Price shall belong to the Corporation.

(c) A Stockholder whose Stock is purchased (or such Stockholder's estate) shall have the option to purchase any policy on such Stockholder's life for its interpolated terminal reserve (cash surrender) value.

6. VOTING AGREEMENT; BOARD; OFFICERS

6.1 Voting Agreement

Each Stockholder agrees to vote all Stock now or hereafter owned by such Stockholder, and to take all other action within such Stockholder's control (including executing written consents under the Code), so as to give effect to the provisions of this Section 6. This Section is a stockholder voting agreement under K.S.A. § 17-6508(c).

6.2 Board Composition

(a) The Board shall consist of [____] directors (or, under a § 17-7211 stockholder-management provision, the Stockholders shall manage the business directly).

(b) Each Stockholder (or group of Stockholders) holding at least [____]% of the outstanding Stock shall be entitled to designate [one (1)] director, and the Stockholders shall vote their Stock to elect each such designee. A designating Stockholder may remove and replace its designee at any time, and the Stockholders shall vote accordingly.

(c) A vacancy created by a designated director shall be filled only by the Stockholder entitled to designate that director.

6.3 Officers

The Stockholders shall cause the Board (or the stockholder-managers) to elect or appoint the following officers, who shall serve until removed in accordance with the Bylaws: [President / CEO: ____; Secretary: ____; Treasurer/CFO: ____].

6.4 Cumulative Voting

The parties acknowledge the default rules of the Code regarding voting for directors, including that cumulative voting is available only if the articles of incorporation so provide. To the extent cumulative voting would otherwise apply, the Stockholders agree to vote so as to implement the designation rights in Section 6.2, and the Articles of Incorporation [shall / shall not] authorize cumulative voting.

7. DRAG-ALONG & TAG-ALONG RIGHTS

7.1 Drag-Along

If Stockholders holding at least [____]% of the outstanding Stock (the "Dragging Stockholders") approve a bona fide arm's-length sale of the Corporation (whether by sale of stock, merger, or sale of substantially all assets) to an unaffiliated third party, the Dragging Stockholders may require each other Stockholder to (a) vote all Stock in favor of the transaction, (b) sell the same proportion of Stock on the same per-share terms, and (c) execute reasonable transaction documents, provided that no Stockholder shall be required to give representations other than as to title, authority, and ownership, and that liability shall be several (not joint) and capped at the proceeds received.

7.2 Tag-Along

If one or more Stockholders (the "Transferring Stockholders") propose to Transfer, in one transaction or a series, Stock representing more than [____]% of the outstanding Stock to a third party (other than a Permitted Transfer), each other Stockholder may elect to participate in the sale on the same terms, selling a pro rata portion of its Stock. The Transferring Stockholders shall give at least [twenty (20)] days' written notice of the proposed sale, and each electing Stockholder shall respond within [ten (10)] days.

8. PREEMPTIVE RIGHTS

8.1 Grant

Except for Exempt Issuances, before the Corporation issues any new Stock or securities convertible into Stock, it shall offer each Stockholder the right to purchase such Stockholder's pro rata portion (based on then-current ownership) on the same price and terms, so as to maintain such Stockholder's percentage ownership.

8.2 Procedure

The Corporation shall deliver written notice of the proposed issuance describing the securities, price, and terms. Each Stockholder shall have [twenty (20)] days to elect to exercise its preemptive right. Stock not subscribed for may be issued to the proposed purchaser within [ninety (90)] days on terms no more favorable than those offered to the Stockholders.

8.3 Exempt Issuances

"Exempt Issuances" means issuances (a) under a board-approved equity-incentive plan, (b) upon conversion or exercise of outstanding securities, (c) in connection with a bona fide acquisition or strategic transaction approved under Section 9, or (d) approved by Stockholders holding at least [____]% of the outstanding Stock.

9. PROTECTIVE PROVISIONS / SUPERMAJORITY

Notwithstanding any contrary provision of the Bylaws, the Corporation shall not take any of the following actions without the approval of Stockholders holding at least [____]% of the outstanding Stock (or the unanimous consent where indicated):

(a) amending the Articles of Incorporation or Bylaws (including any change to or revocation of a Close-Corporation Election);

(b) issuing additional Stock or securities (other than Exempt Issuances) or creating a new class or series;

(c) declaring or paying any dividend or distribution other than pro rata;

(d) merging, consolidating, converting, or selling all or substantially all assets;

(e) dissolving, liquidating, or filing for bankruptcy;

(f) incurring indebtedness in excess of [$____] or granting liens on material assets;

(g) entering into any transaction with a Stockholder, director, officer, or Affiliate other than on arm's-length terms;

(h) materially changing the nature of the Corporation's business; and

(i) approving annual compensation of any officer in excess of [$____].

The parties may also establish greater quorum or voting requirements for stockholder or director action in the Articles of Incorporation or Bylaws, consistent with the Code.

10. INFORMATION RIGHTS

The Corporation shall deliver to each Stockholder: (a) annual financial statements within [one hundred twenty (120)] days after fiscal year-end; (b) quarterly unaudited statements within [forty-five (45)] days after each fiscal quarter; and (c) upon [five (5)] Business Days' written demand stating a proper purpose, reasonable access during normal business hours to the books and records to which a stockholder is entitled under K.S.A. § 17-6510, subject to a confidentiality undertaking.

11. RESTRICTIVE COVENANTS

11.1 Non-Competition

During the period each Stockholder owns Stock and for [two (2)] years thereafter, no Stockholder who is also an employee, officer, or director shall, within [geographic area], directly or indirectly engage in or own an interest in any business that competes with the Corporation, except for passive ownership of less than [two percent (2%)] of a publicly traded company. The parties intend this covenant to be reasonable in scope, duration, and geography under Kansas law.

11.2 Non-Solicitation

During the same period, no such Stockholder shall solicit (a) any employee or contractor of the Corporation to terminate their relationship, or (b) any customer or supplier to cease or reduce business with the Corporation.

11.3 Confidentiality

Each Stockholder shall hold in confidence all Confidential Information of the Corporation and shall not use or disclose it except for the benefit of the Corporation, both during and after the period of stock ownership.

11.4 Remedies; Reformation

The Stockholders acknowledge that breach of this Section would cause irreparable harm and agree that the Corporation shall be entitled to injunctive relief in addition to other remedies. If any covenant is held overbroad, a court may, to the extent permitted under Kansas law, modify it to the maximum enforceable scope.

12. DEADLOCK RESOLUTION

12.1 Deadlock Defined

A "Deadlock" exists if the Board (or the stockholder-managers) or the Stockholders are unable, after [two (2)] properly noticed meetings held at least [fifteen (15)] days apart, to reach the vote required to act on a material matter, and the inability materially impairs the Corporation's business.

12.2 Escalation; Mediation

Upon a Deadlock, the matter shall first be referred to the senior representatives of the disputing Stockholders for good-faith negotiation for [thirty (30)] days, and then, if unresolved, to non-binding mediation under Section 15.

12.3 Buy-Sell Shotgun

If a Deadlock remains unresolved [sixty (60)] days after mediation begins, any Stockholder (or 50% group) (the "Offeror") may deliver a written notice to the other (the "Offeree") stating a price per share. The Offeree shall, within [thirty (30)] days, elect either (a) to sell all of its Stock to the Offeror at that price, or (b) to buy all of the Offeror's Stock at that same price. Failure to elect within the period shall be deemed an election to sell. The resulting purchase shall close under Section 4.3 and be paid under Section 5.3.

12.4 Other Remedies; Close-Corporation Provisions

The buy-sell procedure is in addition to, and not in lieu of, the parties' statutory rights. If the Corporation has made a Close-Corporation Election, the close-corporation provisions afford additional deadlock and dispute remedies, including the appointment of a provisional director under K.S.A. § 17-7212 and a custodian under K.S.A. § 17-7213, and the parties may include in the articles a provision under K.S.A. § 17-7214 authorizing dissolution at will or upon a specified event. The parties also retain their rights to judicial dissolution under the Code.

13. CERTIFICATE LEGEND

Each certificate representing Stock (and any notice for uncertificated Stock under K.S.A. § 17-6401(f)) shall bear the following conspicuous legend, consistent with K.S.A. § 17-6426(a) (and, if applicable, the close-corporation notation requirements of K.S.A. § 17-7202(b)/§ 17-7211(b)):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER RESTRICTIONS, VOTING AGREEMENT, AND OTHER TERMS OF A SHAREHOLDER AGREEMENT DATED [__/__/____], A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION. SUCH SHARES MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT AGREEMENT. [IF A CLOSE CORPORATION: THIS CORPORATION IS A CLOSE CORPORATION ORGANIZED UNDER K.S.A. 17-7201 ET SEQ., AND [ITS BUSINESS IS MANAGED BY THE STOCKHOLDERS UNDER K.S.A. 17-7211].] THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED ABSENT REGISTRATION OR AN EXEMPTION THEREFROM.

The Corporation shall note the restriction conspicuously as required by K.S.A. § 17-6426(a); unless so noted (or contained in the § 17-6401(f) notice), the restriction is ineffective except against a person with actual knowledge of it.

14. TERM & TERMINATION

14.1 Term

This Agreement becomes effective on the Effective Date and continues until terminated under Section 14.2.

14.2 Termination

This Agreement terminates upon the earliest of: (a) the written agreement of all Stockholders; (b) the dissolution, bankruptcy, or liquidation of the Corporation; (c) a single Stockholder coming to own all outstanding Stock; or (d) the closing of an initial public offering or listing of the Corporation's stock on a national securities exchange (which, if the Corporation is a close corporation, would also terminate the Close-Corporation Election under K.S.A. § 17-7208).

14.3 Effect of Termination

Termination does not affect rights or obligations that accrued before termination, including any closing of a purchase already triggered. The confidentiality obligations of Section 11.3 survive termination.

14.4 Amendment

This Agreement may be amended only by a writing signed by the Corporation and by Stockholders holding at least [____]% of the outstanding Stock (or, where it disproportionately and adversely affects a Stockholder, with that Stockholder's written consent). The parties may specify that certain provisions require unanimous consent, and any amendment affecting a Close-Corporation Election or a § 17-7211 management provision shall comply with the applicable close-corporation amendment requirements.

15. DISPUTE RESOLUTION & GOVERNING LAW

15.1 Governing Law

This Agreement is governed by and construed in accordance with the laws of the State of Kansas, without regard to conflict-of-laws principles, and the internal affairs of the Corporation are governed by the Code.

15.2 Mediation

Before commencing arbitration or litigation (other than for injunctive relief), the parties shall attempt in good faith to resolve any dispute through non-binding mediation administered by [mediation provider] in [County] County, Kansas.

15.3 Arbitration

Any dispute not resolved by mediation shall be finally resolved by binding arbitration administered by the [American Arbitration Association] under its Commercial Arbitration Rules, before [one (1) / three (3)] arbitrator(s), seated in [City], Kansas. Judgment on the award may be entered in any court of competent jurisdiction.

15.4 Forum; Injunctive Relief

Notwithstanding Section 15.3, any party may seek temporary or preliminary injunctive relief or specific performance (including to enforce Sections 3, 6, and 11) from the state or federal courts located in [County] County, Kansas, to which the parties submit to jurisdiction and venue.

15.5 Attorneys' Fees

The prevailing party in any proceeding to enforce this Agreement is entitled to recover reasonable attorneys' fees and costs.

15.6 Jury Trial Waiver

EACH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF THIS AGREEMENT NOT SUBJECT TO ARBITRATION.

16. GENERAL PROVISIONS

16.1 Specific Performance

The parties agree that the Stock is unique, that monetary damages are inadequate for breach of this Agreement, and that the non-breaching parties are entitled to specific performance.

16.2 Further Assurances

Each party shall execute such further documents and take such further actions as may be reasonably necessary to carry out this Agreement, including, if a Close-Corporation Election is desired, executing and filing the certificate of amendment required by K.S.A. § 17-7204.

16.3 Notices

All notices shall be in writing and delivered personally, by nationally recognized overnight courier, or by certified mail (return receipt requested) to the addresses on Exhibit C, and are effective upon receipt (or refusal).

16.4 Successors and Assigns; Joinder

This Agreement binds and inures to the benefit of the parties and their respective heirs, personal representatives, successors, and permitted assigns. No Person shall acquire Stock unless such Person first executes a joinder agreeing to be bound by this Agreement.

16.5 Severability

If any provision is held invalid or unenforceable, it shall be reformed to the minimum extent necessary, and the remaining provisions shall remain in full force and effect.

16.6 Entire Agreement

This Agreement, together with its Exhibits, constitutes the entire agreement among the parties regarding its subject matter and supersedes all prior understandings.

16.7 Counterparts; Electronic Signatures

This Agreement may be executed in counterparts and by electronic signature, each of which is deemed an original and all of which together constitute one instrument.

16.8 No Third-Party Beneficiaries

Except as expressly provided, this Agreement is solely for the benefit of the parties and their permitted successors and assigns.

17. SIGNATURES

IN WITNESS WHEREOF, the parties have executed this Shareholder Agreement as of the Effective Date.

THE CORPORATION:

[CORPORATION NAME], a Kansas corporation

By: [________________________________]

Name: [____________________]

Title: [____________________]

Date: [__/__/____]

THE STOCKHOLDERS:

[________________________________]
Name: [____________________]
Date: [__/__/____]

[________________________________]
Name: [____________________]
Date: [__/__/____]

[________________________________]
Name: [____________________]
Date: [__/__/____]

18. SOURCES & REFERENCES

• Kansas General Corporation Code, K.S.A. § 17-6001 et seq. (DGCL-modeled).
• K.S.A. § 17-7201 — Laws applicable to close corporations (close-corp provisions §§ 17-7201–17-7216 apply on election; balance of Code otherwise applies).
• K.S.A. § 17-7202 — Contents of articles of a close corporation (holder limit, transfer restrictions, no public offering).
• K.S.A. § 17-7204 — Election to become a close corporation (≥ 2/3 of each class).
• K.S.A. § 17-7211 — Management of close corporation by stockholders (Delaware § 351 analog); stockholders deemed directors; conspicuous-notation requirement.
• K.S.A. § 17-7212, 17-7213, 17-7214 — Provisional director; custodian; dissolution provisions for close corporations.
• K.S.A. § 17-6426 — Restrictions on transfer or ownership of securities (Delaware § 202 analog; permitted forms; conclusively reasonable purposes including Subchapter S).
• K.S.A. § 17-6508 — Voting trusts and other voting agreements (Delaware § 218 analog; § 17-6508(a) voting trusts; § 17-6508(c) stockholder voting/pooling agreements; § 17-6508(d) saving clause).
• K.S.A. § 17-6401(f) — Uncertificated shares; required notice.
• K.S.A. § 17-6502 — Voting of stock; action by stockholders.
• K.S.A. § 17-6304 — Preemptive rights (opt-in; not granted unless articles so provide).
• K.S.A. § 17-6510 — Inspection of corporate books and records.