Shareholder Agreement - Maryland

SHAREHOLDER AGREEMENT — [CORPORATION NAME], a Maryland 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"), intended to constitute a unanimous stockholders' agreement under Md. Code Ann., Corps. & Ass'ns § 4-401, is made and entered into as of [__/__/____] (the "Effective Date") by and among [CORPORATION NAME], a Maryland corporation (the "Corporation"), and the persons listed on the Share Schedule below, each of whom is a stockholder of the Corporation and executes this Agreement (each, a "Stockholder" or "Shareholder" and, collectively, the "Stockholders").

RECITALS

A. The Corporation is a corporation organized and existing under the Maryland General Corporation Law, Md. Code Ann., Corps. & Ass'ns Article (the "MGCL" or "Act"), having its principal office in [COUNTY/CITY], Maryland.

B. The Corporation [has elected / will elect] to be a close corporation pursuant to Md. Code Ann., Corps. & Ass'ns § 4-201, by a clear statement in its charter that the Corporation is a close corporation, approved by every stockholder. The Stockholders intend this Agreement to be a "unanimous stockholders' agreement" governed by § 4-401.

C. As of the Effective Date, the authorized capital of the Corporation consists of [____] shares of [CLASS/SERIES] stock, [par value [$____] per share / without 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, governance, 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 regulate the affairs of the Corporation and the relations of the Stockholders.

E. The persons executing this Agreement constitute ALL persons who are stockholders of the Corporation as of the Effective Date, and they intend that this Agreement be enforceable as a unanimous stockholders' agreement under § 4-401, as a written voting agreement under § 2-510.1, and as a transfer restriction authorized by §§ 4-401(a)(2) and 2-204(b).

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.

"Act" or "MGCL" means the Maryland Corporations and Associations Article, Md. Code Ann., Corps. & Ass'ns, as amended, including Title 4 (Close Corporations).

"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, if any; if the Corporation has elected to have no board under § 4-301, references to the Board mean the Stockholders acting in that capacity.

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

"Charter" means the Corporation's charter (articles of incorporation and all amendments and supplements) as defined in § 1-101 of the Act.

"Close Corporation" means a corporation that has elected close-corporation status under § 4-201.

"Confidential Information" means all non-public information concerning the Corporation, its business, finances, customers, suppliers, trade secrets, and affairs, in any form.

"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 under 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.

"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.

"Unanimous Stockholders' Agreement" means this Agreement, as a unanimous stockholders' agreement under § 4-401.

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 regulating the affairs of the Corporation and the relations of the Stockholders, imposing certain restrictions and obligations on the Stockholders and the Stock, and providing for the continuity, governance, and orderly transfer of ownership of a closely-held Maryland corporation.

2.2 Statutory Basis — § 4-401 (Unanimous Stockholders' Agreement)

This Agreement is entered into under, and is intended to be effective and enforceable as a unanimous stockholders' agreement pursuant to, Md. Code Ann., Corps. & Ass'ns § 4-401. Under § 4-401(a), the stockholders of a close corporation may, by unanimous stockholders' agreement, regulate any aspect of the affairs of the Corporation or the relations of the Stockholders, including:

(a) the management of the business and affairs of the Corporation;

(b) restrictions on the transfer of stock;

(c) the right of one or more Stockholders to dissolve the Corporation at will or on the occurrence of a specified event or contingency;

(d) the exercise or division of voting power;

(e) the terms and conditions of employment of an officer or employee of the Corporation, without regard to the period of employment;

(f) the individuals who are to be directors and officers of the Corporation; and

(g) the payment of dividends or the division of profits.

2.3 Close-Corporation Election; Amendment; Successors

(a) Election prerequisite. The effectiveness of this Agreement as a § 4-401 unanimous stockholders' agreement depends on the Corporation's election of close-corporation status under § 4-201. The Stockholders shall cause and maintain that election and shall not terminate it except by unanimous consent.

(b) Amendment. Consistent with § 4-401(b), this Agreement may be amended only by the unanimous written consent of the Stockholders then party to it.

(c) Successor stockholders. Consistent with § 4-401(c), a Stockholder who acquires Stock after this Agreement becomes effective is considered to have assented to, and to be a party to, this Agreement (i) whether or not the Stockholder has actual knowledge of it, if the Stock was acquired by gift or bequest from a party to the Agreement, and (ii) if the Stockholder has actual knowledge of the Agreement at the time of acquisition, if the Stock was acquired in any other manner. The Stockholders shall require each new holder to execute a joinder.

2.4 Alternative / Supplemental Bases

To the extent any provision of this Agreement is not within the § 4-401 power (for example, if close-corporation status lapses), the parties intend that:

(a) the voting provisions of Section 6 be enforceable as a written agreement for the exercise of voting rights under § 2-510.1 (specifically enforceable);

(b) any voting trust be governed by § 2-510; and

(c) the transfer restrictions be enforceable under § 2-204(b) (charter authorization) and as a matter of Maryland freedom of contract.

Section 4-401(e) provides that the section does not affect any otherwise valid agreement among stockholders.

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 is void ab initio, shall not be recognized on the books of the Corporation, and confers no rights upon the purported transferee. These restrictions are imposed under § 4-401(a)(2) and § 2-204(b) to maintain the Corporation's closely-held (and close-corporation) status, to preserve exemptions under applicable securities laws, and for other reasonable purposes.

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 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 over-allotment rights 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 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 all Stockholders (or, if a lesser threshold is permitted, 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.

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 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 § 2-505 of the Act), so as to give effect to the provisions of this Section 6. This Section is intended to be effective as part of the § 4-401 unanimous stockholders' agreement and as a written agreement for the exercise of voting rights under § 2-510.1.

6.2 Board / Management

(a) [Option A — Board.] The Board shall consist of [____] directors. 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. A vacancy in a designated directorship shall be filled only by the Stockholder entitled to designate that director.

(b) [Option B — No Board (§ 4-301).] The Stockholders [may] elect, consistent with § 4-301, to have NO board of directors, in which case the business and affairs of the Corporation shall be managed by the Stockholders, who shall exercise all powers of directors and be subject to the standards and liabilities of directors under § 4-302/§ 4-303.

6.3 Officers

The Stockholders shall cause the following officers to be elected, who shall serve until removed in accordance with the Bylaws or this Agreement: [President / CEO: ____; Secretary: ____; Treasurer/CFO: ____].

6.4 Cumulative Voting

The parties acknowledge the default rules of the Act regarding voting for directors. To the extent cumulative voting would otherwise apply, the Stockholders agree to vote so as to implement the designation rights in Section 6.2(a), and the Charter [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 or required by Title 4):

(a) amending the Charter or Bylaws, or terminating close-corporation status;

(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 [$____].

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' notice, reasonable access during normal business hours to the books and records the Corporation is required to maintain, including the close-corporation inspection and statement-of-affairs rights under §§ 4-403 and 4-404 and the general stockholder inspection rights under § 2-512, subject to a confidentiality undertaking and proper-purpose limitations.

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 and enforceable under Maryland law, subject to Md. Code Ann., Lab. & Empl. § 3-716 where applicable.

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 is entitled to injunctive relief in addition to other remedies. If any covenant is held overbroad, a Maryland court may reform (blue-pencil) it to the maximum enforceable scope under Maryland law.

12. DEADLOCK RESOLUTION

12.1 Deadlock Defined

A "Deadlock" exists if the Board (or the Stockholders, if there is no board) 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

The buy-sell procedure is in addition to, and not in lieu of, the parties' statutory rights, including the right of a stockholder of a close corporation to petition a court of equity for involuntary dissolution under § 4-602 (including on the ground of internal dissension such that the business can no longer be conducted to the advantage of the stockholders generally) and the court's authority to enforce the unanimous stockholders' agreement or, alternatively, order dissolution under § 4-401(d). The parties may, consistent with § 4-401(a)(1) and (c), authorize a designated Person to resolve a deadlock or require dissolution upon a specified contingency.

13. CERTIFICATE LEGEND

Each certificate representing Stock (and any information statement for uncertificated Stock) shall bear the following conspicuous legend, consistent with the close-corporation requirements of Title 4 and the transfer restrictions under §§ 4-401(a)(2) and 2-204(b):

THIS CORPORATION IS A CLOSE CORPORATION UNDER MD. CODE ANN., CORPS. & ASS'NS, TITLE 4. THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TRANSFER RESTRICTIONS, VOTING AGREEMENT, AND OTHER TERMS OF A UNANIMOUS STOCKHOLDERS' AGREEMENT DATED [__/__/____] ENTERED INTO UNDER MD. CODE ANN., CORPS. & ASS'NS § 4-401, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION. SUCH STOCK MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE WITH THAT AGREEMENT AND TITLE 4. THE STOCK HAS 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 and the close-corporation status conspicuously on each certificate; counsel should confirm the specific Title 4 legend requirements for close-corporation stock certificates.

14. TERM & TERMINATION

14.1 Term

This Agreement becomes effective on the Effective Date and continues until terminated under Section 14.2. A unanimous stockholders' agreement under § 4-401 has no statutory term limit and continues until terminated by its own terms or by unanimous consent.

14.2 Termination

This Agreement terminates upon the earliest of: (a) the unanimous 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 termination of close-corporation status and the closing of an initial public offering or listing of the Corporation's stock on a national securities exchange.

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

Consistent with § 4-401(b), this Agreement may be amended only by the unanimous written consent of the Stockholders then party to it.

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 Maryland, without regard to conflict-of-laws principles, and the internal affairs of the Corporation are governed by the Act.

15.2 Mediation

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

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], Maryland. Judgment on the award may be entered in any court of competent jurisdiction.

15.4 Forum; Equitable Relief

Notwithstanding Section 15.3, any party may seek temporary or preliminary injunctive relief or specific performance (including enforcement of the unanimous stockholders' agreement under § 4-401(d) and to enforce Sections 3, 6, and 11), or may file a statutory dissolution petition under § 4-602, in the Circuit Court (sitting as a court of equity) for [County/City], Maryland, 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 and other equitable relief, consistent with § 4-401(d) and § 2-510.1.

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 maintaining the close-corporation election and conforming the Charter and Bylaws to this Agreement.

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, and binds successor stockholders to the extent provided in § 4-401(c). 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 and the Charter, 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 (Unanimous Stockholders' Agreement) as of the Effective Date.

THE CORPORATION:

[CORPORATION NAME], a Maryland corporation

By: [________________________________]

Name: [____________________]

Title: [____________________]

Date: [__/__/____]

THE STOCKHOLDERS (all persons who are stockholders as of the Effective Date):

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

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

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

18. SOURCES & REFERENCES

• Maryland Corporations and Associations Article, Md. Code Ann., Corps. & Ass'ns § 1-101 et seq.
• Md. Code Ann., Corps. & Ass'ns, Title 4 (Close Corporations), §§ 4-101 et seq.
• § 4-401 — Unanimous stockholders' agreement (stockholders of a close corporation may regulate any aspect of the corporation's affairs or the relations of stockholders, including transfer restrictions, voting power, management, directors/officers, employment terms, dissolution, and dividends; amendable only by unanimous written consent; binds successor stockholders; enforceable by a court of equity, with dissolution as an alternative). (Maryland's functional substitute for an MBCA § 7.32 omnibus statute.)
• § 4-201 — Election of close-corporation status (clear charter statement; approved by every stockholder).
• § 4-301 / § 4-303 — Close corporation may elect to have no board of directors; stockholders manage.
• § 4-403, § 4-404 — Close-corporation right of inspection; statement of affairs.
• § 4-602 — Involuntary dissolution of a close corporation (internal dissension; default on a § 4-401 purchase obligation).
• § 2-510.1 — Written agreement for the exercise of voting rights (general voting-agreement statute; specifically enforceable).
• § 2-510 — Voting trust.
• § 2-204(b) — Charter provisions, including restrictions on the transfer of stock.
• § 2-205 — Preemptive rights (only as provided in the charter).
• § 2-505 / § 2-507 / § 2-512 — Action without meeting; voting and proxies; stockholder right of inspection.
• Md. Code Ann., Lab. & Empl. § 3-716 — Non-compete restrictions for certain low-wage employees (verify current threshold).